Competence Annual Report 2006 Annual Report 2006

Nemetschek Aktiengesellschaft Nemetschek AG Konrad-Zuse-Platz 1 81829 Munich Germany Phone: +49 (0) 89-9 27 93-1219 Fax: +49 (0) 89-9 27 93-5404 E-mail: [email protected] www.nemetschek.com Nemetschek in brief

The Nemetschek Group is a leading international IT company in the AEC sector (Architecture, Engineering, Construction). The software company develops integrated solutions for the complete life cycle of buildings and real estate – from building design and construction through to facility management. The company’s products are currently used by more than 270,000 customers in 142 countries and in 16 languages to optimize the complete building creation and management process in terms of quality, cost and time. Nemetschek was founded in 1963 by Professor Georg Nemetschek and is listed in the Prime Standard on the Frankfurt Stock Exchange.

Operating income 109.5 100.3 9.2 % Concept and Editorial Offi ce Gross profi t 101.8 91.7 11.1 % Maren Moisl as % of sales 94.8 % 92.8 % Janet Franke (Nemetschek AG) EBITDA 20.7 16.2 27.2 % as % of sales 19.2 % 16.4 % Design and Realization EBIT 17.8 13.1 36.1 % FIRST RABBIT GmbH, Cologne as % of sales 16.5 % 13.2 % Pre Press Net income (Group shares) 13.6 11.7 16.5 % FIRST RABBIT GmbH, Cologne Per share in € 1.41 1.21 Producer Net income 14.4 12.2 18.1 % Mediahaus Biering GmbH, Munich Cash fl ow for the period 21.3 17.3 22.6 % Pictures Liquid assets 32.0 29.0 10.6 % cover: PFP Architekten BDA, Hamburg, copyright: Ralf Buscher Equity capital 55.1 48.1 14.5 % contents: PFP Architekten BDA, Hamburg, copyright: Frahm / artur

page 3 – 5: copyright: Nemetschek AG page 6 – 7: PFP Architekten BDA, Hamburg, copyright: Ralf Buscher page 8: picture top right: Volkhausen + Lubkoll Gesellschaft von Architekten mbH, Berlin, copyright: Michael Lubkoll picture bottom left: copyright: Jerry Kopare, for Lasercad: Sverige AB picture bottom right: Wandel Hoefer Lorch, Saarbrücken, copyright: Roland Halbe page 9: picture above: Getty Images picture below: copyright: Ingenieur-Büro Höhne, Bergen on Rügen page 10: picture above: copyright: Digital Vision Ltd picture bottom left: Stephan Braunfels Architekten BDA, Munich/Berlin, copyright: Haydar Koyupinar, Pinakothek der Moderne picture bottom right: copyright: VARITEC Engineering AG, Raumfachwerke + Stahlbau, Niederscherli, Switzerland page 11: picture above: copyright: ATOS Architekten ZT, Vienna picture below: copyright: BATEG Ingenieurbau GmbH, Berlin page 12: picture above: copyright: Imagesource Ltd picture below: Steidle Architekten, Munich, copyright: Reinhard Görner page 13: picture above: JSK Architekten, Frankfurt, BGP Design, Stuttgart picture below: copyright: Disney, SONY PICTURES imageworks page 20 – 21: copyright: Zentrum Paul Klee, Bern Contents

Foreword by the Management Board 2 Interview 4 Building the Future 6 Design Business Unit 8 Build Business Unit 11 Manage Business Unit 12 Multimedia Business Unit 13 The Share 14 Corporate Governance 16 Report of the Supervisory Board 18

Consolidated Financial Statements of Nemetschek AG Group Management Report 22 Consolidated Balance Sheet 30 Consolidated Income Statement 32 Consolidated Cash Flow Statement 33 Statement of Changes in Group Equity 34 Notes to the Consolidated Financial Statements 35 Analysis of the Fixed Assets of the Group 90 Audit Opinion 92

Financial Statements of Nemetschek AG Balance Sheet 94 Income Statement 96

University of Flensburg, PFP Architekten BDA, Hamburg 2 Foreword

Foreword by the Building the Future Design Business Unit Build Business Unit Management Board Interview

Foreword by the Management Board

Ladies and Gentlemen, Dear Shareholders,

2006 was an extremely successful year for Nemetschek. Three things are What Makes Us Strong particularly worth mentioning: Professionally tailored IT solutions are our unique selling point. Nemetschek is thus the strategic IT partner for all companies confronted 1. The group has enjoyed a signifi cant rise in sales and earnings. We were with the complex processes in the construction and real estate industry. able to increase sales to 107.5 million euros and the operating profi t According to experts, the demands in the AEC sector in the software (EBIT) to 17.8 million euros. industry will continue to grow worldwide, and institutes are expecting annual growth rates of 6.8 percent, on average. We will exploit these 2. We continued to implement our acquisition strategy and achieved favorable underlying conditions to advance Nemetschek further. The two strategic takeovers with the acquisition of SCIA International NV acquisition of the Belgian SCIA International NV in February 2006 was in Belgium and Graphisoft SE in Hungary. an important step towards greater internationalization. Since then, we have been the number one in Europe for integrated civil engineering soft- 3. The Nemetschek share has been on the up for fi ve years now, and last ware. Thanks to our success on the market, we have an excellent basis for year developed far better than all benchmarks, with an increase of growth and investment, putting us in the position to realize a transaction more than 50 percent. This is all good news – for shareholders, em- like Graphisoft. ployees, and our customers around the world. For the board and management, it is also motivation to shape the future. Our aim is to What the Acquisition of Graphisoft Means maintain and build on today‘s successes over the medium and long This is the largest acquisition in Nemetschek‘s history and of strategic term, with creativity, energy and professional expertise. importance to our group. We are proud that we have been able to realize this transaction and are convinced that it will strengthen our position Where We Are at the forefront of international software companies in the AEC section. Nemetschek is the only software company worldwide that provides for Three core statements demonstrate our potential: IT solutions that encompass the entire building design, construction and management process. Our product spectrum ranges from building design 1. Nemetschek will strengthen its position in the market even further and construction through to property and real estate management. The with the acquisition of Graphisoft. In fi gures, this means: annual sales favorable business fi gures in recent years show that we are pursuing the far in excess of 140 million euros, more than 270,000 customers world- right strategy. International growth and the enhancement of our techno- wide, software in 16 languages, more than 1,000 qualifi ed employees. logy and market leadership are the most important drivers here.

“We are looking optimistically to the future. Nemetschek has established brands and a global customer base. We believe there are good opportunities for the future in further regional expansion.” Ernst Homolka (CFO and Board Spokesman) 3

Manage Business UnitMultimedia Business Unit The Share Corporate Governance Report of the Supervisory Board

2. With the acquisition, Nemetschek will signifi cantly improve its business And on the subject of our successful course: for years, the best and most KPIs: through a signifi cant growth in sales, a considerable increase in successful architects have been using our products on outstanding projects the EBITDA operating profi t and an increase in operating cash fl ow. in the sphere of art and culture. Prominent examples include the Zentrum Paul Klee in Bern, the Theater Erfurt, the Jewish Center Jakobsplatz in 3. Nemetschek will acquire new and additional expertise – our research Munich and exhibition planning in the Guggenheim Museum, New York. and development capability will increase enormously as a result of the We have therefore selected illustrations from this fi eld, inspired by Joseph Graphisoft team. Beuys, who said, “Art is the only revolutionary force.”

Our Vision In future, anyone looking into software in the area of real estate and construction will contact Nemetschek. Innovative and growth-oriented companies work independently alongside each other, develop new products and services, acquire customers, win markets. Our vision: with different Ernst Homolka powerful and creative companies, we are on the map everywhere in the (CFO and Board Spokesman) world, always looking for the best solutions. Extensive customer benefi ts, the latest technology and reliable quality all speak for the solutions offered by our group.

Dear shareholders, this information clearly shows the future opportunities Dr. Peter Mossack Michael Westfahl of the Nemetschek Group. In 2007, the board, management and employees (Management board member) (Management board member) will once again do everything to meet the high expectations of the capital market as well as the needs of our customers, and thereby keep steering the company on its successful course.

Michael Westfahl Ernst Homolka Dr. Peter Mossack (Management (CFO and Board Spokesman) (Management board member) board member) 4 Interview

Foreword by the Building the Future Design Business Unit Build Business Unit Management Board Interview

Interview: “Our targets will remain ambitious!”

Mr. Homolka, last year Nemetschek stated one of its medium-term Your fl agship is the Archicad software solution. aims was sales of around 150 million euros. Back then, this appeared Bojár: Yes. The particular strengths of our main product Archicad lie in the almost utopian, but thanks to the acquisitions and the company‘s area of design. The Archicad brand is established and is valued in the own growth, you are suddenly very close to this target. Can things industry as a high-quality product. Around 80 percent of Graphisoft‘s sales continue at this speed? volume is generated by the architecture division, which is very profi table. Homolka: We are delighted that our company has developed so well. On the one hand, it was the result of our own organic growth – in Germany, You always explain the merger with Nemetschek in terms of “Joining we were able to grow by 8 percent after years of stagnation. That‘s quite European forces”. What do you mean by that? respectable. On the other hand, our progress abroad has been dynamic, Bojár: After several years of decline, the global AEC (Architecture, Engi- and the proportion of sales is now 57.5 percent. However, the real break- neering, Construction) software market is growing again. This growth through is the result of the takeover of Graphisoft. Our targets are ambi- momentum is fueled by a massive transition of the mainstream market tious. We want to make great leaps forward across the whole group in from 2D to model-based 3D design. This is a great opportunity. However, the coming years. we need a critical size to explore it. When two leading companies such as Nemetschek and Graphisoft join forces, they are strenghtening their Does this also apply for the earnings? position on the global market over the long term. Homolka: Defi nitely. In the software industry, profi t-turnover ratios of 20 percent based on the EBITDA are achieved internationally. Mr. Westfahl, after years of slow economic development, we are see- This is our aim. ing an upturn in Germany. The optimism could be clearly felt at the BAU trade fair in January 2007 in Munich. Do you share this view? What is the situation regarding further acquisitions? Westfahl: Yes, absolutely. We are very happy with the way the trade fair Homolka: We are sensible business people. First we will integrate Graphisoft. went and in particular the feedback from customers on our new products The takeover is not just a challenge fi nancially but also in terms of manage- and services. The trade fair also showed what an excellent market position ment, controlling and direction. However, we may make smaller acquisitions Nemetschek enjoys. Customers trust our quality, our expertise, and the that supplement the activities of the core business units, for example in company‘s role as innovator. And our partners have high expectations of the area of management. the cooperation with Graphisoft. Together with our new Graphisoft collea- gues, we will be even stronger in future. Mr. Bojár, as the founder of the company, no one knows Graphisoft like you do. Tell us about the company. What role does your new Design2Cost method play? Bojár: I founded the company in 1982 with a handful of employees, and Westfahl: A very important role. Accurate costing and quantity takeoff now we are one of the top vendors of architecture software in the world. are becoming increasingly important for design, construction and manage- Graphisoft achieved sales of 30.5 million euros for the 2006 fi nancial year. ment, particularly from the point of view of building clients and investors. Today, we have 265 employees and a global network of very dedicated, loyal We are the fi rst vendor with a TÜV-certifi ed method for quantity takeoff. and independent sales partners. Graphisoft has subsidiaries in Hungary, We were only able to achieve this because we are aware of what our Germany, USA, Japan, Great Britain, Spain and Finland. Our products are customers need. We know the time and cost pressure they are under and currently used by more than 100,000 customers in 82 countries. offer suitable IT solutions.

Ernst Homolka Gabór Bojár (CFO and Board Spokesman) (Chairman of the Board of Directors, Graphisoft SE) 5

Manage Business UnitMultimedia Business Unit The Share Corporate Governance Report of the Supervisory Board

What is happening with regard to cooperations? that perfectly meets their needs. One key factor here is that in practice Westfahl: Our strategic partnership with Adobe is particularly important. these systems work together so that all the planners involved can carry The aim of this alliance is to optimize processes of architects and engi- out their individual tasks in the most effective way. The standard for data neers. To do this, we will integrate the PDF generation function on the exchange in the CAD sector is being expanded based on open IFC standards. basis of the original Adobe PDF Libraries in our products across the whole IFC stands for Industry Foundation Classes. To date, the driving forces group. Simplifi ed data exchange saves time and costs, improves data secu- behind this have been Nemetschek and Graphisoft. We will ensure that rity, increases fl exibility and therefore improves work processes. This close data from all the products in our group can be perfectly exchanged. cooperation with Adobe is a milestone for our company. What is your work currently focusing on? Dr. Mossack, Nemetschek is regarded as a technology and innovation Mossack: Our main topic is Round-Trip Engineering. Here, data is synchro- leader. What do you attribute this to? nized between CAD and structural analysis software, meaning that time- Mossack: For years, Nemetschek has been constantly investing in research consuming and error-prone multiple data entry is a thing of the past. and development (R & D). Around one third of our employees are employed In practice, this means that geometric information is transferred from Allplan in this area, in Germany, Slovakia, the United States and Austria. They Engineering to SCIA.ESA PT in a single step. There, the static system is guarantee the innovative force of the company. Our activities focus on the defi ned automatically, followed by material properties, load and support development of new standard software and the enhancement of existing conditions. When a planning change is made, the user can simply press standard software. We have made the products in all areas more open, a button to update the changed components. All the entries made previ- more functional and more user-friendly. Thanks to the team from Graphi- ously are retained. Because, in practice, a static calculation is often not soft, our R & D expertise will signifi cantly increase. a single process but rather a series of continuously changing plans, Round-Trip Engineering represents a considerable improvement to the Nemetschek has three CAD systems. What direction are your plans participating engineers’ work processes. moving in? Mossack: As far as we are concerned, there are currently fi ve CAD plat- Was the solution developed by Nemetschek? forms on the AEC market. Three of these come from Nemetschek – Allplan, Mossack: It is a co-production between Nemetschek and SCIA Inter- Archicad and VectorWorks. All the systems have their own place and national NV and impressively demonstrates the synergies that can arise depending on customer requirements, complement each other to provide through an acquisition. The new version bridges the gap between the a unique offering. AEC projects are becoming increasingly complex with CAD world of Allplan Engineering and the structural analysis world regard to the type of data integration and the different requirements for of SCIA.ESA PT. sub-tasks. In future, customers will be able to choose the planning system

Dr. Peter Mossack Michael Westfahl (Management (Management board member) board member) Building the Future

Designing the Future of Building with Competence

The German dictionary Duden defi nes the term “competence” as expertise, We are particularly proud of the fact that Nemetschek products have been skills, responsibility. Nemetschek has been applying its expertise, skills and used to design and construct concert halls, theaters, museums and univer- responsibility in the construction and real estate industry for more than sities in many cities. They have been used to create centers for art and 40 years. The Nemetschek name is synonymous with intelligent products culture, music, acting or painting across the world. For us reason enough and services. Creative, intelligent, modern. Year on year, decade on decade, to choose the excellent examples of modern cultural architecture as the the company has been setting standards with new products, innovative leitmotif for the current annual report. Follow us to the Pinakothek der solutions, brave decisions. The group has long been regarded as a good Moderne in Munich, the Zentrum Paul Klee in Bern or the Guggenheim con tact for research and development, as a partner for universities and Museum in New York. Franz Kafka wrote, “Anyone who keeps the ability to other higher-education institutions, and as an advisor to ministries and see beauty never grows old.” There is much beauty to be discovered in the institutes. Customers around the world take advantage of Nemetschek‘s museums of this world – in both art and architecture. We should use these product solution portfolio – on fi ve continents, in numerous languages, treasures as the inspiration and motivation for our day-to-day work, as for a range of projects. well as for the challenges of the future. Theatre Erfurt, PFP Architekten BDA, Hamburg

There are certainly plenty of challenges. The building industry is under- But innovation also means thinking one step ahead. It must be possible going a drastic transformation that will bring a long-term change to the to exchange data across functions and applications, for example between value-adding process in the construction industry in the next few years. designers, building service providers or facility managers. Today, we are Nemetschek identifi ed this trend at an early stage. It is the only company therefore heavily involved in the development of the industry format IFC in the world to support the complete life cycle of buildings with inte- Industry Foundation Class, which has become established as a standard for grated software solutions from design and construction through to the exchange of intelligent building data. This is also expressed in our in- management. One important milestone along this route was the develop- volvement in the software manufacturer association IAI (Industry Alliance ment of the “Building Information Model” (BIM). This makes it possible to for Interoperability). In the summer of 2006, this Alliance certifi ed our design buildings in three dimensions at the early draft stage and to assign IFC interface in Allplan for the fi rst time. We will continue to pursue our object properties such as physical and structural characteristics, as well as way of looking at the construction process as a whole and tailoring our costs. To benefi t from the “intelligence” of this information, we developed solutions to this. In 2006, we came another big step closer to this goal. the Nemetschek Object Interface (NOI), an interface that solutions from our portfolio can use to communicate with each other. 8 Business Units

Foreword by the Building the FutureDesign Business Unit Build Business Unit Management Board Interview

Design Business Unit – Intelligent Solutions with High Customer Benefi t

Architects, engineers, construction companies and multidisciplinary consultancies all dream of implementing great ideas and being fi nancially successful. Our integrated IT solutions ensure this success when designing buildings and real estate projects. Creative drafts can be implemented quickly, cost-effi ciently, and to high quality standards. Nemetschek CAD and calculation programs are used worldwide to create design documents, realistic visualizations and animated films for the areas of architecture, construction engineering and building services. Because the same building model (Building Information Model) is used for the entire design process, our customers benefi t from signifi cant time savings during interdisciplinary cooperation, free of intermediate interfaces.

The Berlin architects Nemetschek on Growth Course network is strengthened and expanded and a coordinated Volkhausen + Lubkoll have The excellent news in the Design business unit came in procedure for the two companies will signifi cantly improve designed more than 540 December and caused a sensation in the industry. Just the market position in Europe, Asia and America. display cabinets and exhibi- before the end of the year, Nemetschek acquired a majority Nemetschek‘s position in the Microsoft / Windows world tion walls in the German interest in the Hungarian company Graphisoft. As a result, has always been good and in future we will also be the Historical Museum in Berlin our company is now a real global player. With the Allplan, leading provider of planning tools on the Apple Macintosh with the help of our CAD VectorWorks and Archicad global brands, we will in future platform, thanks to the products from VectorWorks and programs. Since June 2, occupy the leading position in the fi eld of AEC software Graphisoft. Perspectives that offer new opportunities and 2006, visitors have been solutions (Architecture, Engineering, Construction). In possibilities for all customers. able to fi nd out about 2,000 future, our customers around the world will be able to years of German history in select from the Nemetschek portfolio the application that Innovative Solution for Cost Security the historical Zeughaus, the best suits their needs. But day-to-day business also brought many new develop- oldest building on “Unter den ments in 2006. One important topic was our new Design- Linden” (pictured above). Data Exchange Made Easy 2Cost method. The background: architects and designers AEC projects, which are becoming more and more complex, are increasingly forced to think and act as entrepreneurs. pose challenges above all for the type of data integration. Their success has long been rooted not just in creativity but The data exchange format IFC, which Nemetschek and also on whether they have been able to stay within bud- Graphisoft have played a leading role in developing, offers get by the end of the project. Nemetschek designed the the basic technology here. For our customers and partners, costing method Design2Cost for this purpose. A marketing this means a whole host of new opportunities. The sales campaign was launched in the spring and generated

The Jewish Center on Jakobs platz in Munich was opened on November 9, 2006. The architecture was the work of Wandel Hoefer Lorch from Saarbrücken, and the structural design was by engineering offi ce Sailer Stephan and Partners (pictured in the middle). 9

Manage Business UnitMultimedia Business Unit The Share Corporate Governance Report of the Supervisory Board

Construction processes involve a high degree of complexity and division of labor and include a large number of people. Generally speaking, the construction process can be divided into a design phase, building phase and management phase. In the past, it was common for software solutions to only cover some parts of the construction process and to work independently of each other. The solutions from Nemetschek are based on an intelligent building model (Building Information Model). They enable quantities, costs and building processes to be simulated reliably and with a high quality, and provide planning results for subsequent construction require ments (structural analysis planning, facility management, etc.) at an early design stage. This is where Nemetschek‘s industry expertise stands out.

a great deal of interest among customers. This new Mobile Solutions for the Construction Site method for cost planning enables planners, general Planning and construction in existing assets will be another future activity. Old apartments, contractors and prefabricated house manufacturers to administration and school buildings, and industrial sites – more and more buildings are determine their costs quickly and reliably during the being converted to meet building clients’ new requirements. This is particularly true with early planning phase. Users receive a solution for regard to new legal requirements or technical equipment. We have therefore developed building and cost planning, AVA, calculation and con- innovative solutions for our customers to enable them to meet higher requirements relating struction data from a single source and benefi t from to the mobile capture of building data or digital dimensioning. Our mobile applications increased productivity and revenues. Expressed in are one example of this, enabling numerous tasks to be processed in real time on the confi gures, this means that the workload for quantity struction site. takeoff is reduced by an average of 70 percent. This has been rewarded not only by customers and their Nemetschek Actively Involved in Research Projects high demand, but also by TÜV Süd: Nemetschek is the To secure and extend our technology leadership, we are also involved in numerous research fi rst software vendor to receive TÜV certifi cation for projects. For example, Nemetschek has been selected as the design partner for Hochtief graphical quantity takeoff. and the Fraunhofer Institute. Development of “collaborative real estate” is on the research agenda in the inhaus2 project. The aim is to develop buildings that serve as the prototype for future functional buildings. Hochtief uses our CAD programs for inhaus2 planning.

In the ArKos project, we investigated how processes between project teams can be improved. ArKos stands for “Architektur Kollaborativer Szenarien” [architecture of collaborative scenarios] and was initiated by the Institute for Information Systems at the German Research Center for Artifi cial Intelligence in Saarbrücken and funded by the Ministry of Education and Research.

Cooperation with Adobe Simplifi es Interdisciplinary Communication The strategic alliance with Adobe Systems Inc. shows that Nemetschek is the fi rst choice as a partner for intelligent and innovative projects. The aim of the collaboration is to optimize processes for architects and engineers. To do this, Nemetschek will integrate the PDF generation function on the basis of the original Adobe PDF Libraries in its products across the group – a milestone in the industry. This strategic partnership enables our customers to make their document-based communication processes even more effi cient, helping them save time and money. 10 Business Units

Foreword by the Building the Future Design Business Unit Build Business Unit Management Board Interview

International Success between CAD and structural analysis software, resulting Alongside the positive news at home, the 2006 fi nancial in effi cient and low-cost structures. The Eurocode 2 stan- year was again characterized by great success on the dards for structural design also had a positive effect on international markets. In western Europe, it was primarily demand. In October, SCIA reached the 6,000 mark for France and Italy that reported above-average growth rates. licenses. Most users of the civil engineering software come New products, innovative solutions, as well as a rejuve- from Germany, Austria, Switzerland, France, the Czech nated economy led to a very successful overall result in Republic and Slovakia. But the United States, India and Europe. NEMETSCHEK NORTH AMERICA also developed Australia are also upcoming markets. The most important particularly well. We were able to strengthen and build on new customers that SCIA was able to win in 2006 include our position as the leading provider of CAD programs on the French aviation company Air France. Glaser – isb cad – the Apple-Macintosh platform. Business in Europe and Programmsysteme GmbH was also able to increase the Japan developed particularly well. The new version 12.5 number of new customers through additions to its product in particular played an important part in this growth. range. One of the factors for success was the CAD Start- For the fi rst time, the CAD programs from NEMETSCHEK up program for founders of new companies. But Glaser NORTH AMERICA are available in Spanish. The company also paved the way for newcomers: with a marketing offen- wants to expand its expertise in the localization of soft- sive at universities, we introduced students to Glaser‘s The market for construction ware pro ducts in order to capture new markets such as CAD programs at an early stage. At Friedrich + Lochner software has been on a growth China. NEMETSCHEK NORTH AMERICA also made great GmbH, extensive enhancements to existing programs con- course for three years now. advances in new customer business. The greatest success tributed to business success. One focus of development Worldwide, market research was achie ved with the British fi lm company Eon Produc- was on planar and spatial steel structures, which were institutes expect average tions, which designed the sets of the new James Bond completely overhauled. There was also high demand among growth of around 7 percent in fi lm “Casino Royale” using VectorWorks. our customers for the software service concept. the AEC market (Architecture, Engineering, Construction) up Strengths in Civil Engineering Reinforced to 2010. At around 40 per- In civil engineering, we were able to further reinforce our cent, architecture is still the position as the market leader for civil engineering software. largest area within the AEC In this market, we are represented by Nemetschek Ingenieur- market. bau GmbH, SCIA International NV, Glaser – isb cad – Programmsysteme GmbH and Friedrich + Lochner GmbH. With our new acquisition SCIA International NV, we closed the last remaining gap in the area of complex calculation software. In the last fi nancial year, SCIA did particularly well thanks to the new Round-Trip Engineering method. Round-Trip Engineering enables data to be synchronized

The Pinakothek der Moderne in Munich is a leading international center for the art, architecture and design of the 20th and 21st centuries. In terms of size, the building is one of the largest new museums in the world. At the heart of the museum is the staircase installation, a massive interior sculpture 100 m long and 30 m high. The rotunda is an impressive architectural space by architect Stephan Braunfels (pictured left). 11

Manage Business UnitMultimedia Business Unit The Share Corporate Governance Report of the Supervisory Board

Build Business Unit – Competence in Construction for Medium-Sized Construction Companies

Nemetschek Bausoftware GmbH achieved its targets in 2006 despite a diffi cult market environment. The company was able to further reinforce its positive image as a reliable IT partner for industry software in Germany, Austria, Switzerland and Luxembourg. In Switzerland, Nemetschek Bausoftware GmbH‘s market share is already 50 percent. Growth is also being promoted in Austria. Here, the company is taking advantage of synergies with other subsidiaries of the Nemetschek Group. For example, the commercial modules of the Nemetschek industry solution BAU fi nancials with the name AUER fi nancials is already supplementing the market leader for construction software in Austria, AUER Success, to form an integrated solution for Austria. This integrated product will help us capture new market segments.

New Products Winning over Customers In 2006, the Austrian market was characterized by a re- RONDO is the name of the In 2006, customers were very interested not only in the luctance to invest. Nevertheless AUER – Die Bausoftware garden pavilion by Vienna Design2Cost cost planning method, but also in the new GmbH was able to hold its own. One reason for this is the architects ATOS, a circular intranet portal solution based on Microsoft SharePoint new mobile dimensioning system, a combination of the building that can be used as Portal Server. As an information platform, the solution commercial software AUER Success, a mobile pocket PC a holiday home, atelier, sauna supports construction companies in all phases of project and a laser distance measuring device. The new costing or café. The architects used handling. It is accessed directly on the integrated BAU package for the electronic industry, which AUER developed solutions from AUER so that fi nancials industry solution. With the portal application, together with EDS (Elektro Daten Servicegesellschaft) was tender, planning and coordina- employees no longer need to search through records, well received by the market. AUER also achieved success tion of the individual bidders folders, and fi le systems to fi nd the information they with Austrian Federal Railroads, which had already installed could be offered from a single need. Instead, every member of the project team can dis- the AUER Success modules on more than 300 workstations source. play all data on screen in seconds and in personalized in 2005 and have now purchased further licenses. The com- form. The wheel-rail specialists Schreck-Mieves are already pany also won American conglomerate Honeywell, Austrian using the solution successfully to handle projects. plant engineering company CTeam and oil company RAG as new customers.

First Large Order in Kazakhstan Kablan is one of the most important construction companies in Kazakhstan and provides high-quality turnkey construction. Kablan uses the BAU fi nancials software solution from Nemetschek Bausoftware GmbH to optimize construction site processes through good preparation and to introduce controlling to accompany construction. With its help, Kablan wants to introduce operational accounting based on western European standards. The company also wants to use software to support material management processes in the future. The construction software specialist is supplying and implementing a total solution for Kablan made up of its international commercial modules as well as the construction technology programs usually only seen in Germany. The software experts from Achim are also developing an interface to the parallel fi nancial accounting system common in the country, to enable fi nancial reporting to Kazakhstan standards. 12 Business Units

Foreword by the Building the Future Design Business Unit Build Business Unit Management Board Interview

Manage Business Unit – IT Support for Facility and Real Estate Managers

Nemetschek CREM Solutions GmbH & Co. KG can look back on a successful year in which it was able to further improve on its market position. Investors, operators, facility managers and real estate managers can use the solutions from the software specialist in the Manage business area to plan buildings and manage them cost- effectively. The range of products includes applications for commercial (iX-HAUS), technical (MAXIMO) and infrastructural (Allfa) building management. They form the basis for setting up comprehensive corporate real estate management. Nemetschek CREM Solutions‘ customers come from the public sector, real estate, industry, retail, the banking and insurance sector and the health sector. The company was again able to win renowned new customers in these industries in 2006.

Facility management and Optimum Building Management better support is now provided for real estate maintenance, the services provided with Nemetschek CREM Solutions has demonstrated the high an area that is becoming increasingly important. Version it are becoming more and technology standard of our software with the new version 18 4.7 also offers signifi cant improvements in functionality more demanding. In addition of the Allfa software solution. With this, users can capture and user-friendliness. These features convinced numerous to maintenance, a facility the history of their real estate and thus optimize building existing customers to switch to the new solution and also manager‘s tasks include the management. Allfa can also be used to display building won over new customers. planning, controlling and changes, designs or ground plans. The software provides management of buildings a basis for decision-making for space occupancy and occu- A future strategy geared towards increasing solution and and facilities. It goes without pancy planning even if companies move or departments project business in real estate and facility management saying that these tasks are are restructured. The new Allfa add-on modules support will enable CREM Solutions to continue to grow in 2007. impossible without IT support. users in building controlling, ranging from the reservation The aim is to offer customers and prospects a comprehen- of rooms and technical equipment through to the manage- sive range of products and services from a single source. ment of cleaning contracts and costs. To safeguard this growth in terms of quality, we have already hired new employees for sales, consulting and software The iX-HAUS software solution for commercial real estate development. management was also further adapted to the needs of users. The release of the new version 4.7 was an important milestone here. New features have been added; in particular

The Olympic village in Turin Analysts believe the market for facility management was designed by architects offers great potential: for example, the market Steidle, Munich. The archi- research company Lünendonk forecasts annual growth tecture of the buildings in services companies of 8 percent up to 2009. Overall, refl ects the style of Italian the German market for facility management will townhouses. total around 50 to 55 billion euros. This develop ment will continue to have a positive effect on software business. 13

Manage Business Unit Multimedia Business Unit The ShareCorporate Governance Report of the Supervisory Board

Multimedia Business Unit – Realistic Visualization and Animation

2006 was an exceptional year for MAXON Computer GmbH, specialist in 3D animation software. After a very successful start by the MoGraph program module for TV designers, the 10th generation of fl agship product CINEMA 4D broke all the records. Launched in October, the new MAXON version posted the strongest sales month in the whole of the company‘s 20-year history in November. The trade press also honored the achieve- ments: at the UK MacWorld Awards, CINEMA 4D was named best 3D software for the second time. The French Sonovision magazine spoke of “pure pleasure” in working with the new release and the computer magazine c‘t from Germany wrote that the new version was “ahead of the competition in several areas”.

Customers Thrilled with New Version In the 2006 fi nancial year, MAXON was able to extend its The European market for Release 10 of CINEMA 4D offers the most new features in list of reference customers. The most prominent examples visualization and animation any version since the program was created. More than one include the two space agencies NASA and ESA, broad- software was marked by hundred new features have been incorporated, including casting group ProSiebenSAT.1, supermarket chain EDEKA consolidation in 2006. There an overhauled interface, a new help system and enhanced and various subsidiaries of technology group Siemens. were no signifi cant takeovers animation tools. Thanks to the new joint-based skeleton Hollywood movie productions like the animated “Monster or revolutionary product system, the preparation time for a character animation House” or “Open Season”, action fi lms “Spiderman 3” and developments from compe- can be almost halved; the simulation of muscles is now “Pirates of the Caribbean: Dead Man‘s Chest”, as well as titors. In this environment, possible, too. The new version therefore lives up to its “The Chronicles of Narnia” all used MAXON programs. MAXON was able to reinforce reputation as the most easy-to-use professional 3D soft- CINEMA 4D also plays an essential role in the visualization and extend its market position ware. In parallel with the 10th generation of CINEMA 4D, of buildings and landscapes. One particular highlight in with solid developments and MAXON presented the third version of the texturing 2006 was the animation of the 25-hectare Alaska land- customer-oriented products. program BodyPaint 3D in the fall. Users can now use and scape “Yukon Bay” at Hanover Zoo, which brought to life In the new business year, edit images with HDRI color depth. The new tools also a rough tundra landscape, deserted caves and a bay of the software vendor will help to process 3D objects more easily and regularly on polar bears and seals. intensify its activities on the a plane. American and Asian markets.

Fantasy Worlds Created with CINEMA 4D “The Chronicles of Narnia” is the story of four children and their adventures in the magical land of Narnia, a world full of mythical creatures. One of the largest providers of cinema special effects was involved in the production of the fi lm: Sony Pictures Imageworks, a MAXON customer for many years. The designers used CINEMA 4D to design the sets, a process known as matte painting. Matte painter Ivo Horvath explains: “There are real limits to traditional set painting, as only a static image can be painted. Today though, we can easily project even a 2D image onto 3D geo- metry and thus create the illusion of a completely three-dimensional landscape.” For the scene at the station, the artist painted the whole interior: “The only real thing on the set was the staircase on which the actors walked,” says Horvath. The fantasy fi lm uses these matte paintings in over 150 scenes and was nominated for the Oscar for visual effects in 2006. 14 The Share

Foreword by the Building the Future Design Business Unit Build Business Unit Management Board Interview

The Share

Strong Gains for German Shares Dividend Increases to 0.65 Euros The participants on the German stock market can look back on a success- For the second year in a row, Nemetschek AG paid out a dividend to ful 2006. The DAX closed with a fi nal value of 6,597 points. This corres- shareholders. A dividend per share of 0.65 euros was decided at the AGM ponds to an increase in value over the year of 22 percent. On the last day on May 23, 2006. This corresponds to a payout of 6.3 million euros with of trading in the year, the MDAX Small Cap Index reported a new all-time 9.6 million shares and at that point in time corresponded to a dividend high of 9,405 points. At 29 percent, growth across the year exceeded the yield of around 3.0 %. The basic dividend therefore increased by 30 % DAX for the second year running. The SDAX was also successful with compared to the previous year. In the 2005 fi nancial year, the company growth of 31 percent. The technology stocks in the TecDax also did very paid out a basic dividend of 0.50 euros and a one-time bonus dividend well, with growth of 25 percent. of 1.50 euros.

Above-Average Performance of Nemetschek Shares Tax-Free Payout for Small Shareholders With an increase of around 57 percent, the Nemetschek share was able As in the previous year, the Nemetschek AG dividend was paid out from the to surpass the good development of standard indices over the year. tax deposit account in accordance with § 27 of the Corporation Tax Act. Positive news on good business development, the growth course and divi- This meant usually tax-free collection for shareholders residing in Germany dend payout helped the strong share price increase. This development who had a stake of less than 1 % in Nemetschek AG. was accompanied by reports on an upturn in the construction industry in Europe as a whole but especially in Germany. This also turned investors‘ 2005 Annual Report Wins Gold Award attention to the stock. The peak was reached in May with 23.95 euros. At In 2006, we again actively sought out intensive dialog with the capital mar- 275,000 euros, trading activity for the Nemetschek share was at the previ- ket. We visited investors in Europe at numerous road shows, and presented ous year‘s value. The shares were in particularly high demand in the fi rst Nemetschek AG to an interested public at investor conferences. On the half of the year. The average daily turnover was around 14,500 shares. Internet, we published a broad range of information about the group, which we are continuing to expand. One particular highlight was the fact that Shareholder Structure Remains Constant the 2005 annual report won a Gold Award in the Technology category The shareholder structure of Nemetschek AG has not signifi cantly changed (companies with sales of less than 100 million euros). Furthermore, over the year. The share held by the Nemetschek family increased in Novem- Nemetschek’s annual report is among the TOP 100 annual reports of 2005 ber 2006 by 0.97 percent as a result of a purchase by Professor Nemetschek. across all categories. The award was announced by the League of American The Nemetschek family remains the main shareholder with currently Communications Professionals (LACP). Over 1,900 companies from 16 coun- 53.5 percent. The free-fl oat amounts to 46.5 percent. tries took part in the competition.

Share Price Development since January 1, 2005

Mar 05 Jun 05 Sep 05 Dec 05 Mar 06 Jun 06 Sep 06 Dec 06 Mar 07 30 € 28.5 € 300 %

250 %

20 € 200 %

150 %

10 € 100 % 9.00 € 50 %

Development of the Nemetschek share compared to the TecDAX (indexed) Nemetschek TecDAX 15

Manage Business Unit Multimedia Business UnitThe Share Corporate Governance Report of the Supervisory Board

Key Figures

2006 2005 2004

Earnings per share in € 1.41 1.21 0.56

Cash fl ow for the period per share in € 2.21 1.80 1.53

Equity per share in € 5.73 5.00 6.13

Highest price in € 23.95 19.49 10.39

Lowest price in € 13.46 9.00 5.50

Share price on December 31 in € 22.10 14.10 10.00

Market capitalization on December 31 in million € 212.7 135.7 96.3 Price / sales ratio 1.98 1.37 1.00 Price / earnings ratio 15.67 11.65 17.70 Price / equity ratio 3.86 2.82 1.63

Average number of shares outstanding in million € 9.625 9.621 9.611

Shares Owned by Board Members on December 31, 2006 Stock portfolio Stock rights

Management board Gerhard Weiß 13,603 0 Dr. Peter Mossack 0 50,000 Michael Westfahl 0 50,000

Supervisory board Kurt Dobitsch 0 0 Prof. Georg Nemetschek 2,408,222 0 Rüdiger Herzog 0 0

Shareholder Structure in % Financial Calendar 2007

March 23 Press briefi ng on the results 11.51 11.51 May 11 Quarterly statement 1 / 2007 5.44 25.02 % Prof. Georg Nemetschek May 23 Annual General Meeting 11.51 % Dr. Ralf Nemetschek August 10 First-half report 2007

Alexander Nemetschek Quarterly statement 3 / 2007 25.02 11.51 % November 9 5.44 % Ingrid Nemetschek November 12 – 14 Analyst conference at 46.52 % Free fl oat German Equity Forum 46.52 16 Corporate Governance

Foreword by the Building the Future Design Business Unit Build Business Unit Management Board Interview

Corporate Governance

The German Corporate Governance Code in the current version dated The D & O insurance does not include excess insurance for board June 12, 2006 contains important legislative regulations and recommen- members (Code Item 3.8 Clause 2). Nemetschek AG does not believe dations on the management and oversight of Germany‘s publicly traded that excess insurance would improve the motivation and responsibility of corporations. The Code is based on nationally and internationally recog- the members of the management board and supervisory board. nized standards for good and responsible corporate management. These rules, which are applicable in Germany, are to be made transparent for The management board participates in the stock option scheme and national and international investors in order to increase trust in the thus also receives a variable remuneration with risk character and a long- corporate governance of German companies. term incentive effect. This stock option scheme does not include a cap for exceptional, unplanned developments (Code Item 4.2.3 Clause 2). For Nemetschek, good and responsible corporate governance is the basis for a sustained increase in the company value. The management board and An age limit for members of the management board and supervisory supervisory board largely follow the recommendations in the current version board has not been explicitly set and is not currently planned (Code of the Corporate Governance Code, and see corporate governance as an Item 5.1.2 Clause 2 and 5.4.1). An age limit of this kind would generally ongoing process. The principles are regularly checked and adapted in the restrict the company in its selection of suitable management board and light of new experiences, legal requirements, and the further development supervisory board members. Selection is based on business competence of national and international standards. and experience alone. The company is therefore not following this recommendation. Every year, as part of the statutory regulations, the management board and supervisory board of Nemetschek AG issue a statement that the company The code recommendation on the formation of qualifi ed committees will adhered to and adheres to recommendations of the government commis- not be followed (Code Item 5.3), as the supervisory board only has three sion‘s German Corporate Governance Code, and specifi es which recommen- members. The tasks for which the Code recommends the formation of dations were or are not being implemented. The last Nemetschek AG committees are all carried out by the Nemetschek AG supervisory board. declaration of conformity in accordance with § 161 of the Stock Corporation Act was made on March 20, 2007 and can be viewed on the company’s Munich, March 20, 2007 website at www.nemetschek.de. The complete text of the Code can be found on the Internet at www.corporate-governance-code.de. Management Board and Supervisory Board Declaration of Conformity in Accordance with § 161 of Nemetschek AG of the Stock Corporation Act for 2007 In accordance with § 161 of the Stock Corporation Act, the management board and supervisory board of Nemetschek AG declare that since the last decla ration of conformity on March 22, 2006 the recommendations of the June 12, 2006 version of the German Corporate Governance Code have been and are being met with the following exceptions: 17

Manage Business UnitMultimedia Business Unit The ShareCorporate Governance Report of the Supervisory Board

Cooperation Between Management Board and Supervisory Board The price for the acquisition of shares on execution of the options (“exe- The management board reports to the supervisory board regularly, quickly cution price”) corresponds to the arithmetic mean of the closing price and comprehensively in written and verbal form about all relevant issues on the Frankfurt Stock Exchange of the Nemetschek share on the last relating to business development and company planning, including the fi ve trading days before the management board‘s decision or – in the case risk situation and risk management. More information on this can be of management board members of the company, the supervisory board‘s found in the supervisory board‘s report on pages 18 to 19 of this annual decision – on granting of the options, but corresponds at least to the report and on pages 27 to 28 of the management report. proportional amount of basic capital apportioned to the individual share certifi cate (§ 9 Paragraph 1 of the Stock Corporation Act). Remuneration of Management Board and Supervisory Board In accordance with the recommendations of the German Corporate The option rights can be exercised up to 50 % two years after issue at the Governance Code, we have been reporting the individual remuneration of earliest, up to 75 % three years after issue at the earliest, and up to 100 % all members of the Management board and supervisory board since last four years after issue at the earliest. The contract term for each granted year. A breakdown by components for the remuneration of the individual option is fi ve years. A cash settlement is not planned. members can be found on page 86 to 88 of the notes on the consolidated fi nancial statement. An ambitious target was set for the stock option scheme: The option rights can only be exercised if the price of the Nemetschek In accordance with the recommendations of the German Corporate Gover- share – adjusted to take account of any dividend payments, stock rights nance Code, the members of the supervisory board receive performance- or other rights – is at least 150 % of the value of the Nemetschek share at related and fi xed remuneration. This was decided at the Nemetschek Annual the start of issue of the tranche in question no less than two years after General Meeting on May 20, 2005. The variable remuneration is based on the date of issue of the tranche in question at the time of exercising. Three the group earnings per share. In the opinion of the management board and years after issue, the value of the share must be at least 175 %. supervisory board, this standard value provides a reliable measure for the increase in the inner value of the shares and thus company success. A further condition is that the option holder has met the personal and company targets for the year of issue in the year of issue, unless the manage- Management board remuneration is made up of two parts: a basic wage ment board (for the management board, the supervisory board) confi rms and a variable remuneration. The variable remuneration is largely depen- that a failure to meet these targets has no or only limited effect on exer- dent on the company’s sales and profi t targets being achieved. A smaller cising of the options. portion of the variable remuneration is paid out if individual targets are achieved. The management board also participates in the company’s share In the 2005 fi nancial year, 100,000 options were fi rst granted to board option scheme, and receives from this an additional variable component members. The weighted average execution price was 14.60 euros. Since with long-term incentives and an element of risk. then, no options have been forfeited, exercised and / or have lapsed. More information, particularly on the valuation of share-based remuneration, Stock Option Scheme can be found on page 87 to 88 of the notes on the consolidated fi nancial Members of the management board of the company, members of the statement. management board of affi liated companies, employees in key functions and managers of the company and associated companies (benefi ciaries) who can make a signifi cant contribution to increasing the company value can participate in a stock option plan. The purpose of this is to attract qualifi ed managers and ensure they stay with the company over the long term. Report of the 18 Supervisory Board

Foreword by the Building the Future Design Business Unit Build Business Unit Management Board Interview

Report of the Supervisory Board for the Fiscal Year of Nemetschek AG

Ladies and Gentlemen, Topics in the Individual Supervisory Board Meetings Dear Shareholders, Meeting in February 2006: this supervisory board meeting dealt with the management board report on the results for 2005 as a whole and the pre- We can look back on a successful 2006. The development of the Nemetschek sentation of the new business plan for 2006. The meeting focused on the Group has meant signifi cant progress in all areas. The company is now on status report on current M & A projects and the development of Nemetschek a growth course and has been able to increase sales, both organically and CREM Solutions GmbH & Co. KG. Further topics included the strategy plan through acquisitions. The group‘s profi tability has increased considerably. on the profi t-turnover ratio with a catalog of measures for 2006 and the Our market position as the leading company for information technology growth strategy report, as well as the business distribution plan and for the design, construction and management of buildings and real estate management board‘s target agreements for 2006. Finally, the audit report has been extended, and the product solutions have been further improved. was presented and discussed.

Supervisory Board Advises and Monitors Management Board Meeting in March 2006: during this meeting, the supervisory board dis- During the past 2006 fi nancial year, Nemetschek AG‘s supervisory board cussed the annual fi nancial statements presented by the management fulfi lled the tasks it is legally mandated to perform. It advised on the stra- board, Nemetschek AG‘s annual report, consolidated fi nancial statements tegic and business development of the company and on the current events and consolidated annual report, as well as the auditor‘s reports and audit and underlying issues in seven meetings over the course of the year. results. During this supervisory board meeting, which was also attended Nemetschek AG‘s management board presented the supervisory board with by the appointed auditor, the board established Nemetschek AG‘s annual comprehensive quarterly reports about the business situation, including fi nancial statements for 2005 and approved the consolidated statements sales, revenue and liquidity developments, as well as the company‘s overall for 2005, which had also been audited, and a decision was made on the situation. These reports were supplemented by monthly reporting on sales appropria tion of profi ts. Other topics included business progress in the development and contribution margins for the group as a whole and for fi rst quarter of 2006 with a forecast for 2006 as a whole, the 2006 busi- the individual subsidiaries. In addition, the supervisory board kept itself ness plan and the report on the M & A status. The strategy for the civil en- informed about important business processes, intended business plans, as gineering area and the growth strategy were discussed in more detail. well as about the company‘s strategic orientation. The respective reports Preparations for the 2006 AGM were also discussed. were presented to all supervisory board members and were debated in joint sessions of the management board and the supervisory board. With Meeting in May 2006: this supervisory board meeting dealt with the the assistance of Nemetschek AG‘s reports, the supervisory board moni- management board report on business development in the fi rst quarter. tored and supported the management board‘s work. A central topic was the company strategy 2006 to 2008, on which the supervisory board was presented with detailed information. Approval was given for projects requiring approval. The supervisory board did not form any committees. The full supervisory board and management Meeting in June 2006: the topics in this supervisory board meeting were board attended all supervisory board meetings. The chairman of the super- the sales development in business with the parent company, the profi t- visory board was also in regular contact with the management board out- turnover ratio and the organizational structure of business management. side the supervisory board meetings, and participated in important strategy The supervisory board also discussed the European rollout of the Allplan meetings in operational areas and in acquisition meetings. The management technology and M & A projects. The supervisory board‘s effi ciency survey board discussed important business matters with and advised the super- was also on the agenda. visory board chairman and informed him of the current development of the business situation and important business transactions. The supervisory board was therefore able to get an independent picture of the company and its development. 19

Manage Business UnitMultimedia Business Unit The Share Corporate Governance Report of the Supervisory Board

Meeting in July 2006: in this supervisory board meeting, the management The meeting of the supervisory board held on March 20, 2007 to discuss board’s report on business developments in the second quarter was dis- Nemetschek AG‘s annual fi nancial statements and annual report as well cussed with the projects for the whole year. The meeting also discussed as the consolidated fi nancial statements and consolidated annual report current M & A projects and further acquisition targets, as well as the was attended by the auditors, who answered all questions thoroughly. strategic cooperation with Adobe. The supervisory board also discussed current topics from the areas of technology development and sales. The supervisory board has examined the annual fi nancial statements, the management report, the consolidated fi nancial statements and the group’s Meeting in October 2006: this supervisory board meeting dealt with the manage ment report, too. The supervisory board approves the result of the management board‘s report on business developments during the third auditor‘s examinations based on its own examinations and raises no quarter and the outlook to the end of the year. This was followed by a objections. The supervisory board explicitly endorses the annual fi nancial report and resolution on current M & A projects. Concept presentations statements of Nemetschek AG and the consolidated fi nancial statements were made with a business plan for resolution on the following topics: for fi scal year 2006. The annual fi nancial statements of Nemetschek AG civil engineering, architecture, Allplan, Nemetschek Open Interface (NOI), for fi scal year 2006 are thus fi nal. Ease of Use Initiative and Design2Cost. The meeting also heard presentations on an update to the marketing improvement in Germany and Europe, Changes in the Management Board the business plan for the OnSite product series, and an update on the stra- At the start of 2007, there were changes in the management board of tegic cooperation with Adobe. Finally, customer satisfaction, development Nemetschek AG: Ernst Homolka, Director of Finances and Administration in the international markets, and the annual plan for 2007 were discussed. of Nemetschek AG, was appointed Chief Financial Offi cer and Board Spokesman by the supervisory board as of January 1, 2007. Ernst Homolka Meeting in December 2006: in this supervisory board meeting, the mana- has been at Nemetschek AG since 1999. Longstanding CEO Gerhard Weiß gement board report on business development in the fourth quarter was stepped down on January 31, 2007. The supervisory board, the Nemetschek discussed. There was a report and resolution on the Graphisoft acquisition family and all the staff would like to thank Gerhard Weiß for his excep- and further M & A projects. The meeting also dealt with marketing improve- tional commitment and many years of service to the company and wish him ment in Europe, customer satisfaction, and update on the strategic coop- well in his retirement. The members of the supervisory board remain eration with Adobe and development in the international markets. The unchanged. 2007 business plan and rules of procedure of the management board were discus sed in detail. The supervisory board would like to thank the management board and all Nemetschek Group employees for their dedication and work performance Annual Financial Statements and Dependent Company Report Audited during the past fi scal year. The annual fi nancial statements prepared by the management board according to the German Commercial Code, taking into consideration the accounting principles and annual report of Nemetschek AG for the 2006 Munich, March 20, 2007 fi scal year, the consolidated fi nancial statements prepared according to the International Financial Reporting Standards (IFRS), as applicable in the EU, and also according to § 315 a Paragraph 1 of the German Commercial Code, and the consolidated annual report for the 2006 fi scal year have been audited and approved without qualifi cation by Ernst & Young AG Wirtschafts- prüfungsgesellschaft Steuerberatungsgesellschaft, Munich. The supervisory Kurt Dobitsch board has persuaded itself as to the independence of the auditors. Chairman of the Supervisory Board

Financial Statements

Consolidated Financial Statements of Nemetschek AG * Group Management Report 22 Consolidated Balance Sheet 30 Consolidated Income Statement 32 Consolidated Cash Flow Statement 33 Statement of Changes in Group Equity 34 Notes to the Consolidated Financial Statements 35 Analysis of the Fixed Assets of the Group 90 Audit Opinion 92

Financial Statements of Nemetschek AG Balance Sheet 94 Income Statement 96

* Translation of German Report

Zentrum Paul Klee, Bern Consolidated 22 Financial Statements

Group Management Report Consolidated Balance Sheet Consolidated Consolidated Income Statement Cash Flow Statement

Group Management Report for the 2006 Financial Year

Business and Underlying Conditions In 2006, the global economy remained on a growth course, and according to economists grew by 3.7 %. The highest impetus for growth came from Nemetschek in Brief the United States and China. The development in Europe was somewhat The Nemetschek Group is a leading vendor of information technology more reserved, with an estimated 2.7 %. focusing on the design, construction and management of real estate. Development in the construction industry in Europe is probably higher Around the world, the Nemetschek Group develops and sells innovative than growth overall. In an estimate from the start of December 2006, the software products and services for the challenges of the future. The research association Euroconstruct expected a 3.2 % increase in building pro duct range includes high-quality, integrated solutions for the complete activities in Europe for the past year. In their medium-term outlook for life cycle of buildings and real estate. 2006 to 2009, experts are expecting an average growth rate in the construction industry as a whole of 2 %. The development in Germany, Europe‘s Overview: Profi table Growth largest market, exceeded the cautious optimism shown at the start of 2006 was an extraordinarily successful year for the Nemetschek Group. 2006. According to estimates from Germany‘s main construction industry Sales rose by 8.8 % to 107.5 million euros. The positive development association HDB from January of this year, construction sales in Germany refl ects the improved market position, good underlying conditions in the rose by 6.5 % in 2006, after a fall of 6.5 % in the previous year. The HDB individual regions and the successful acquisition of SCIA International NV. experts remain optimistic for 2007 and expect an increase in sales of 3.5 %. The economic situation in the German domestic market, in particular, For the third year in a row, IT investments have seen an increase over showed a positive growth trend for the fi rst time in years. Earnings the previous year. The European Information Technology Observatory increased signifi cantly for the fourth year in a row. The operating profi t (EITO) expects growth of 3.8 % in the European Union for 2006 in the fi eld (EBIT) rose by 36.1 % to 17.8 million euros. of information technology, compared with 3.4 % in the previous year. For Nemetschek wants to further extend its market position as leading 2007, the experts from EITO are expecting growth of 4.2 %. provider of integrated software solutions. The further internationalization of the Nemetschek Group will be very important. Additional profi table growth is the result of acquisitions and strategic partnerships. With the Business Units acquisition of the majority interest in the Hungarian company Graphisoft SE, Nemetschek realized the largest acquisition in the company‘s history Design at the end of the fi nancial year. The merger with Graphisoft makes a deci- The Design business unit developed positively in 2006. With an increase sive contribution to improving the global market presence and strategic in sales of 9.0 %, the operating profi t rose by 33.0 %. With a sales volume positioning of the Nemetschek Group. of 80.8 million euros, Design is the largest business unit in the Nemetschek Group and is represented globally with its own sales companies and part- The Sector Market ners. Customers include architects and civil engineers. The Nemetschek Good indicators of our individual customers‘ willingness to invest in infor- Group‘s range of products provide IT solutions to cover all phases in the mation technology (IT) include primarily the good general conditions, the creation of real estate – from the draft, design, structural analysis and outlook in the construction and real estate industry and overall spending on costing. IT. In the 2006 fi nancial year, this basic economic data certainly improved.

Group revenues by regions in %

7 6 Germany 44 Europe without Germany

43 Rest of world USA 23

Statement of Notes to the Consolidated Audit Opinion Financial Statements of Changes in Group Equity Financial Statements Nemetschek Aktiengesellschaft

Development was particularly successful at the US group subsidiary 5,000 customers worldwide and is represented in 16 countries. The group, NEMETSCHEK NORTH AMERICA Inc., Columbia, Maryland, USA, which repor- founded in 1974, is market leader in the Benelux countries and is also one ted double-digit growth in sales and earnings for the second year running. of the leading companies in the industry in the Czech Republic and Slovakia. The main contributing factor here was the new version of the main product An offi ce complex in “La Défense” in Paris, the Olympic soccer stadium in VectorWorks, which was launched at the start of the year. In western Crete and the King Abdulaziz International Airport in Saudi Arabia are just Europe, development was particularly good in France and Italy, which also some of the buildings created using software from SCIA. SCIA International saw double-digit growth in sales. In Germany, Nemetschek once again NV had a successful year in 2006 and as of March 2006 is included in the demonstrated its innovation leadership with the Design2Cost campaign. consolidated fi nancial statements with sales of 7.0 million euros. The new method decisively improves the overall workfl ow in CAD and cost planning and generated a lot of interest in the industry. Nemetschek Acquires Majority in Graphisoft SE In January, Nemetschek sold its interest in acadGraph CAD Studio GmbH, At the end of the year, Nemetschek achieved another strategically impor- which operates on the German market and achieved negative results in tant acquisition. In December, a majority interest was acquired in the recent years. Adjusted to take account of acadGraph‘s previous year‘s sales, Hungarian Graphisoft SE European Company Limited by Shares, Budapest, sales in Germany developed positively. This development was accompanied Hungary, a main competitor in the area of design. On December 31, 2006, by better underlying economic conditions. Nemetschek Engineering GmbH, Nemetschek purchased 54.3 percent of the 10.6 million shares in Graphi- with headquarters in Wals near Salzburg, Austria, which was founded at soft SE at a price of 9 euros per share. With this acquisition, the software the start of 2005 to enable the company to process the market for planning vendor extended its global leadership and became the number one on the software for fi nished parts more effectively, also reported good sales growth European market for AEC software solutions (Architecture, Engineering, in 2006 as well as a considerable increase in operating profi t. Construction) with the CAD programs Allplan, VectorWorks and Archicad. Graphisoft SE is a specialist in software solutions for building design. The Leading Europe with Integrated Civil Engineering Solutions company was founded in 1982 and today has 265 employees as well as a At the very start of the year, Nemetschek realized a promising acquisition worldwide network of dedicated, loyal and independent sales partners. and obtained a 78.84 % stake in SCIA International NV, Herk-de-Stad, Graphisoft has offi ces in Hungary, Germany, the USA, Japan, Great Britain, Belgium. In Europe, the Nemetschek Group is therefore the leading provi- Spain and Finland. The company’s products are used by more than 100,000 der of integrated CAD / CAE software (Computer Aided Design / Computer customers in 82 countries. The particular strengths of the main product Aided Engineering) in the area of civil engineering. One decisive advantage Archicad lie in the area of design. In 2006, the Graphisoft Group achieved over our competitors is that Nemetschek offers its customers integrated sales of 30.5 million euros. architecture, civil engineering and structural design solutions. Our market The Graphisoft subsidiary is included in the consolidated fi nancial position is considerably reinforced thanks to this integrated product family. statements on December 31, 2006. This has relevant effects on the bal- Together with SCIA, Nemetschek will be better represented in the area ance sheet positions. As of 2007, the positions for the profi t and loss of high-end engineering design for complex structures such as bridges, statement, such as sales and earnings, for example, will include the Gra- tunnels, and industrial constructions. Nemetschek is thus the only company phisoft subsidiary. Within the Nemetschek Group, Graphisoft is managed as to offer its customers innovative solutions that improve work processes a strategic fi nancial interest. Organization and management structure and within a single data structure, from CAD, structural and design calcula- the company and brand names will be retained. tions through to the optimization of complete structures. SCIA has around

Group revenues in million € Group revenues in %

120 – 70 –

107.5 98.8 60 – 57.5 100 – 96.7 53.1 50.0 50.0 50 – 46.9 80 – 42.5 40 –

60 – 30 –

40 – 20 –

20 – 10 –

2004 2005 2006 2004 2005 2006 Germany international Consolidated 24 Financial Statements

Group Management Report Consolidated Balance Sheet Consolidated Consolidated Income Statement Cash Flow Statement

Build Enterprise Controlling of the Group The Build business unit covers the companies Nemetschek Bausoftware Nemetschek AG is a holding company based in Munich that manages and GmbH, Achim, and ING. AUER – Die Bausoftware GmbH, Mondsee, Austria, controls the decentrally organized Nemetschek Group in a targeted way. which primarily offer commercial and technical business solutions for The four business units Design, Build, Manage and Multimedia extend midsize construction companies and designers in German-speaking coun- across 45 nationally and internationally active companies. The individual tries. The market environment was characterized by the construction com- business units are controlled on the basis of the group’s overall strategic panies‘ reluctance to invest in IT. Sales revenue and operating profi t in direction. There is an overall plan, which takes account of the group the Build business unit were lower than in the previous year. Joint sales companies’ annual budgets. Planning is conducted at revenue type level, activi ties on the part of the two Nemetschek subsidiaries and the increased product and profi t center level, and with the related costs based on sales presence in eastern Europe are already showing fi rst signs of success. and overall cost methods. During the year, monthly reports are drawn up at sales, revenue and cost level for each area, with a detailed analysis Manage of the deviations from the plan and the previous year, and an updated The Manage business unit covers the group activities for commercial real outlook to the end of the fi scal year is also produced each month. Specifi c, estate management and technical and infrastructure-oriented facility company-related key fi gures, which are mapped in a management infor- management bundled in Nemetschek CREM Solutions GmbH & Co. KG, mation system, are used for controlling. The main key fi gures are sales-by- Ratingen. The realignment of sales and the new customer support strategy revenue type and EBITA. Central controlling values are the profi t-turnover have been the main contributors to the rise in sales revenue of 13.2 % ratio and the consolidated contribution margin. compared to the previous year and to a positive operating result. With Management board remuneration consists of variable, fi xed and share- many new functions, the main product Allfa is even more effective and based parts. If the controlling majority of the company changes, there are effi cient for customers, most of which operate in the public sector, real no special resignation agreements for management board members. The estate, industry, retail, banking and insurance and the health sector. management board has the power to increase the capital stock with the agreement of the supervisory board through new share certifi cates, issued Multimedia to the owner, for cash or consideration on a one-time basis or repeatedly. The Multimedia business unit (formerly New Business Opportunities) is The members of the management board are appointed by the supervisory made up of MAXON Computer GmbH in Germany and its subsidiaries board for a maximum of fi ve years. in the USA and England. The MAXON Group can look back on a successful fi nancial year. Sales revenue increased by 28.0 % and the EBIT rose by 1.0 million euros to 1.8 million euros. Earnings, Finance, and Asset Situation The high-end, 3D modeling, animation and rendering software CINEMA 4D and the 3D painting program BodyPaint 3D from MAXON are A Successful 2006 among the leading software solutions in this industry. The new version, In the 2006 fi nancial year, sales were 107.5 million euros (previous year: which includes numerous improvements and was launched in the fall, 98.8 million euros) and therefore rose by 8.8 %. Business was successful in has been very well received by experts and played a leading role in sales Germany, where sales growth – of 8.4 % – was achieved for the fi rst time success.

Group revenues Business Units in % EBITDA Group in million €

25 –

20.7 7.7 20 – Design 5.8 Build 16.2 11.3 Manage 15 –

Multimedia 75.2 11.9

10 –

5 –

2004 2005 2006 25

Statement of Notes to the Consolidated Audit Opinion Financial Statements of Changes in Group Equity Financial Statements Nemetschek Aktiengesellschaft

in years if the previous year‘s sales are adjusted to take account of acad- Net income rose by 18.1 % to 14.4 million euros (previous year: 12.2 million Graph CAD Studio, which was sold at the start of 2006. Domestic sales euros). The minority interests in the net income are 0.8 million euros were 45.7 million euros (previous year: 46.4 million euros). Sales abroad (previous year: 0.5 million euros), which is due solely to the improved earn- also increased signifi cantly in the reporting period. With the acquisition ings of the companies in question. The earnings per share rose to 1.41 euros of Belgian SCIA International NV and the additional growth abroad, the (previous year: 1.21 euros). proportion contributed by international sales to the overall total rose to 57.5 % (previous year: 53.1 %). Cash Flow from Operating Business Activities up 50.5 % In the Design business unit, sales were 80.8 million euros (previous Nemetschek is a fi nancially strong company. The cash fl ow for the period year: 74.1 million euros). Sales of 12.1 million euros were achieved in the increased in fi scal 2006 by 22.6 % to 21.3 million euros (previous year: Build business unit (previous year: 12.6 million euros), and of 6.3 million 17.3 million euros). The cash fl ow from operating business activities impro- euros in the Manage business unit (previous year: 5.5 million euros). In the ved by 50.5 % to 18.3 million euros. The cash fl ow from investing activities Multimedia business unit, sales increased to 8.3 million euros (previous is – 6.3 million euros. The cash fl ow from investment activities is marked year: 6.5 million euros). by effects from the acquisition of Graphisoft and SCIA International NV. Subsidiary acquisitions caused a total of 1.4 million euros in liquid assets Higher Increase in Profi t to fl ow into the group in 2006. An outfl ow of funds totaling 5.3 million The operating profi t (EBIT) rose by 36.1 % to 17.8 million euros (previous euros was recorded for the payment of the purchase price for the remain- year: 13.1 million euros). This corresponds to an EBIT margin of 16.5 % ing 25 % of ING. AUER – Die Bausoftware GmbH in the fi nancial year. (previous year: 13.2 %). The increase in earnings was mainly due to the 2.1 million euros (previous year: 2.1 million euros) were spent on asset Design business unit. The EBIT here rose from 9.4 million euros to 12.5 mil- investments. The cash fl ow from fi nancing activities mainly includes the lion euros. The Multimedia business unit was also very successful, with an dividend payment of 6.3 million euros and the change in liabilities to banks EBIT margin of around 21.3 %. The Manage business unit achieved profi - as a result of the company acquisition amounting to 1.0 million euros. tability and therefore reached the target set for 2006. At 3.5 million euros, the net result of the Build business unit was lower than last year‘s fi gure. Balance Sheet Changes as a Result of the Acquisitions The increase in sales was accompanied by a proportionately lower Compared to the previous year, there were signifi cant changes to balance increase in operating costs. This refl ects the good cost management with- sheet positions, particularly as a result of the acquisition of SCIA Inter- in the Nemetschek Group and the high proportion of self-developed soft- national NV and Graphisoft SE. ware. The operating costs are 91.8 million euros (previous year: 87.3 million On the assets side, the current assets increased from 50.8 million euros euros). The amortization of intangible assets and property, plant, and to 83.6 million euros. The main factor contributing to this increase is the equipment fell by 0.3 million euros. The EBITDA margin improved to 19.2 % rise in liquid assets, trade receivables and current assets. (previous year: 16.4 %). The fi nancial result was 0.8 million euros (previous On December 31, 2006, the capital fund was 34.5 million euros (pre- year: 1.0 million euros). The tax rate was 22.4 % (previous year: 13.4 % vious year: 29.0 million euros). As a result of the company acquisitions, due to one-time effects). the trade receivables increased by 10.2 million euros compared to the previous year. The “Prepaid expenses and other current assets” position was

Net income and Cash fl ow from operating activities in € Group Liquid Assets in million €

2.5 – 60 –

50 – 2.0 – 1.88 39.0 40 – 1.41 1.5 – 1.40 32.0 1.26 29.0 1.21 30 –

1.0 – 20 –

0.57 Net income per share 0.5 – Cash flow from operating 10 – activities per share

2004 2005 2006 2004 2005 2006 Consolidated 26 Financial Statements

Group Management Report Consolidated Balance Sheet Consolidated Consolidated Income Statement Cash Flow Statement

19.5 million euros, compared to 2.8 million euros in the previous year. This Signifi cant Improvements in Data Exchange includes a loan from Graphisoft SE to Graphisoft Park Kft. of 14.5 million Our R & D activities focus on the development of new standard software euros, which was repaid at the start of 2007. The assets to be held for sale and the enhancement of existing standard software. In all divisions of the are 0.6 million euros (previous year: 2.1 million euros). In the previous company, the functionality, user-friendliness, and openness of the current year, this position still contained acadGraph CAD Studio GmbH, which products have been enhanced. One area that research work focused on in Nemetschek intended to sell. 2006 was the integration of SCIA ESA PT and Allplan. An interface is used The non-current assets rose from 30.2 million euros to 120.6 million to merge data from CAD and structural calculations, making Round-Trip euros. As a result of the two new acquisitions, Graphisoft SE and SCIA Engineering possible. In Round-Trip Engineering, data is synchronized Internatio nal NV, the intangible assets increased by 65.9 million euros to between CAD and structural analysis software, meaning that time-con- 67.0 million euros and the goodwill by 19.8 million euros to 43.6 million su ming and error-prone multiple data entry is a thing of the past. When euros. The deferred taxes rose from 1.8 million euros to 3.4 million euros. a planning change is made, the user can simply press a button to update The equities and liabilities side is characterized by the increase in the changed components. All the entries made previously are retained. short-term debts from 31.0 million euros to 134.6 million euros. This posi- To ensure “intelligent” data management between CAD systems and tion contains the purchase price liabilities for the purchase of 54.3 % of other applications, Nemetschek supports improvements and enhancements Graphi soft SE amounting to 54.0 million euros (incl. incidental costs) and in the global open industry data standard IFC (Industry Foundation Class debts to remaining shareholders amounting to 33.6 million euros. The from the IAI), which, like the BIM (Building Information Model), supports debts that are directly related to the assets classifi ed as held for sale are the object-oriented display of building model data independently of vendor deducted with the sale of acadGraph CAD Studio GmbH. and platform. The IFC standard was implemented in version 2006 and is The increase in non-current liabilities is due mainly to the increase in an important component for the integration of planning solutions for deferred taxes from 1.2 million euros to 13.0 million euros. Of this, 10.0 mil- Nemetschek. With the acquisition of Graphisoft SE, which also plays a lion euros are due to the Graphisoft sales price distribution. highly committed role in the IAI (International Alliance for Interoperability), The equity capital totals 55.1 million euros (previous year: 48.1 million the position of IFC compared to the proprietary DWG format from Auto- euros), and there is a corresponding equity ratio of 27.0 % (previous year: desk is being globally strengthened. This is an important step on the road 59.5 %). On December 31, 2006, the balance sheet total was 204.1 million to a fully integrated, intelligent building model (BIM). euros (previous year: 81.0 million euros). Another important aspect was the implementation of strategic partnerships. For example, Nemetschek and the Munich-based baulogis GmbH are Research and Development cooperating on the Internet-based, cross-enterprise and cross-organization management of building projects: planners, building clients, general con- Great Importance for Innovative Strength tractors and investors have access – anywhere, any time – to the latest Research and development (R & D) plays an important part in our company’s documents created during the life cycle of a building. The common data business success. In 2006, we invested 19.7 million (previous year: 18.0 million basis improves communication among all project participants, renders euros) in R & D. This corresponds to a research quota of around 18.4 %. building information transparent and facilitates real estate management. More than one third of Nemetschek Group employees belong to the Furthermore, a strategically important cooperation was agreed between R & D area. The employees work in Germany and in international develop- Nemetschek and Adobe Systems Inc. In future, the two companies will ment locations in Slovakia, the United States, and Austria. R & D activities be working together more closely and will be more intensively promoting are centrally coordinated by the R & D area of the management board. the use of PDF as the future format for data exchange in the building Nemetschek Technology GmbH, based in Munich, is responsible for the industry. In future, all products in the Nemetschek Group will be able development of the Allplan product family. The Nemetschek Slovensko to communicate with each other on the basis of 2D PDF and 3D PDF. In s.r.o. group company, based in Bratislava, acts as the internal R & D service future it will be easier for architects and engineers to exchange and coord- provider for the group. inate drawings and project documents with building clients and partners. 27

Statement of Notes to the Consolidated Audit Opinion Financial Statements of Changes in Group Equity Financial Statements Nemetschek Aktiengesellschaft

Employees The most important risks which could lead to a signifi cant worsening of the Nemetschek Group’s economic situation are in the market- and As of December 31, 2006 the Nemetschek Group employed 1,151 people industry-related sphere. In the Design and Build units, the Nemetschek worldwide (previous year: 735). There were an extra 265 employees on Group’s success depends primarily on the economic development in the December 31, 2006, as a result of the acquisition of a majority interest in construction and real estate industry. Graphisoft. On average for the year, Nemetschek employed 880 people A weak economic situation in the markets relevant for the Nemetschek (excluding Graphisoft, previous year: 736), 421 in Germany, 459 abroad. The Group, namely western and eastern Europe, the United States, and Asia, increase in the number of employees is due on the one hand to the take- can have an adverse effect on the Nemetschek Group’s asset, fi nancial, over of a majority in the Belgian SCIA International NV and on the other and earnings situation. Risk diversifi cation is achieved through market to hirings resulting from the growth phase that is under way. presence in different countries which generally have different economic and competitive risks. In addition, the risk is disseminated through a broad customer base Risk Report and wide-ranging product portfolio. Rapid technological change presents a strategic risk in the market Risk Management segments we operate in. There is a fundamental risk that the innovative Nemetschek AG’s business activities involve opportunities and risks. We use leadership achieved by the Nemetschek Group and / or the particular char- a controlling system to identify and evaluate risks and implement appro- acteristics of the Nemetschek Group products will be lost as a result of priate measures. The aim of group-wide risk management is to identify competitor copies or innovations, and by a failure to adapt to new cus- new risk situations quickly, counteract negative trends, and exploit market tomer requirements and technical innovations. It is still not possible to opportunities. The general group-wide responsibility for identifying risks rule out that new customer requirements will not be identifi ed early at an early stage and counteracting them lies with the management board. enough to enable development targets to be defi ned, meaning that im- In carrying out its tasks, it is supported by members of management, the proved products will not be launched early enough. defi ned risk owners, and the risk manager. Planning, information supply, One important factor for the Nemetschek Group’s success is therefore and risk control are the responsibility of the risk manager. The risk owners to win highly qualifi ed employees and encourage them to remain with the are responsible for the ongoing identifi cation, evaluation and controlling company over the long term. If managers or other qualifi ed employees of risks in their operational areas. Every six months, in a risk assessment, leave the Nemetschek Group and suitable replacements are not found, this the group’s current risk situation is updated and documented. Ad hoc infor- may adversely affect business development. This is particularly true if it mation can be added to these regular reports at other times during the year. results in a loss of knowledge and company-specifi c data caused by insuf- fi cient documentation and archiving. To ward off this risk, the Nemetschek Risks in Future Development Group offers attractive and modern workplaces and continues to improve With our business activities, we are confronted on the one hand with knowledge management processes. strategic risks of a medium- or long-term nature that relate to changes in In the 2006 fi nancial year, Nemetschek AG achieved important strategic environmental factors and management processes, such as the develop- company acquisitions which in view of the global market are decisive for ment, marketing, organization, or management process, for example. In the future market success of the Nemetschek Group. The purchase of new these areas, there are also operational risks of a more short-term nature companies and the integration of them into the group always involves which can lead to direct and indirect losses caused by inadequate or risks. Nemetschek AG attempts to take these into account through extensive incor rect internal processes, systems, or external events as well as human audits in advance and through measures that support the acquisition pro- errors. cess. The supervisory board also actively monitors the acquisitions. Thanks to its many years of experience with company acquisitions, Nemetschek AG is aware of the risks involved in purchasing Graphisoft SE and SCIA International NV in the 2006 fi nancial year. Nemetschek Holding has been Consolidated 28 Financial Statements

Group Management Report Consolidated Balance Sheet Consolidated Consolidated Income Statement Cash Flow Statement

actively involved in controlling the purchased companies from the begin- Note on Forecasts ning. This is achieved on the one hand by appointing members to the This management report contains statements and information about trans- supervisory board of the company in question, and on the other through actions and processes that are in the future. networking and information exchange between the operational units These forward-looking statements are identifi ed by formulations such within the Nemetschek Group. as “expect,” “intend,” “plan,” and similar terms. These forward-looking The structure of fi nancing for the acquisition of Graphisoft SE is statements are based on our expectations today and certain assumptions. explained in detail in the notes. In the fi rst step, the loan of 54.0 million They therefore involve a number of risks and uncertainties. Numerous euros was taken out for the purchase of 54.3 % of the Graphisoft SE factors, many of which are outside the Nemetschek Group’s sphere of shares. Further availment will depend on the outcome of the takeover infl uence, affect the Nemetschek Group’s business activities, success, bid. The time period for acceptance ends on March 21, 2007. business strategy, and results. These factors may mean that the actual Financial risks may also arise as some Nemetschek Group business results, success, and performance of the Nemetschek Group may signifi - activities are conducted in foreign currencies. In the area of the US dollar, cantly deviate from the information on results, success, or performance in particular, and possibly also for the Hungarian forint, currency fl uc- explicitly or implicitly mentioned in these forward-looking statements. tuations can have a signifi cant effect on sales revenue and the operating result. The expected profi t payments are in part secured by currency rate transactions. Detailed information on foreign currency and interest risks Supplementary Report and the risk from fi nancing is provided in the notes on the consolidated fi nancial statement. Nemetschek AG submitted a public takeover bid to the shareholders of To summarize, we are convinced that none of the main risks identifi ed Graphisoft SE at the start of 2007. The bid involves a cash settlement per above, either individually or as a whole, threaten the existence of the com- share of 2,273 forints (equivalent to 9 euros). The bid was transferred to pany, and that the Nemetschek Group will again successfully master the the HFSA (Hungarian Financial Supervisory Authority) on January 17, 2007 challenges of the forthcoming year. Nemetschek expects positive under- for approval. On February 1, the HFSA gave its approval to the Graphisoft lying conditions for the 2007 fi nancial year. We believe our opportunities shareholders for Nemetschek AG‘s public takeover bid. The period during for positive business development and expansion of our market position which the Graphisoft shareholders can accept the Nemetschek bid runs from as the leading provider for integrated software solutions for the complete February 4 to March 21, 2007. On February 1, 2007, the Graphisoft Board life cycle of buildings lie in greater internationalization, strategic partner- of Directors recommended that Graphisoft shareholders accept the offer. ships and targeted acquisitions. We also want to fully exploit our market potential in existing markets with our innovative software solutions. After the close of the fi scal year, there were no noteworthy changes to the underlying conditions. The economic situation has not changed to such an extent that would signifi cantly affect our business activities, and the industry situation is not signifi cantly different to that of December 31, 2006. 29

Statement of Notes to the Consolidated Audit Opinion Financial Statements of Changes in Group Equity Financial Statements Nemetschek Aktiengesellschaft

Forecast report The Nemetschek Group‘s cash fl ow for the period will rise considerably. The interest costs will rise as a result of the Graphisoft acquisition. The In 2007, experts expect positive overall economic development around pro fi tability achieved on the basis of the EBITDA should improve further the world and growing demand in the AEC (Architecture, Engineering, in 2007 and 2008. Construction) area of the software industry. The most important markets are Europe and North America. Average growth of 6.8 % p.a. is expected up until 2010. On the basis of these underlying economic conditions, the Munich, March 6, 2007 management board expects the Nemetschek Group to continue to develop well. One central focus here will be on constant growth. Attention will also The Management Board be paid to using the Nemetschek Group‘s broad customer base to market existing and improved solutions in markets that have already been cap- tured. With the takeover of Graphisoft, Nemetschek will again signifi cantly strengthen its market position. The customer base will grow considerably. Additional opportunities for growth come from using the Graphisoft Ernst Homolka Dr. Peter Mossack Michael Westfahl marketing base for the solution portfolio of the whole Nemetschek Group. Furthermore, the main product from Graphisoft – Archicad – will not only strengthen the market presence of Nemetschek in the Windows environment, it will also lead to complete market coverage in the Macintosh environment. The research and development capacity of the Nemetschek Group will be boosted enormously with the Graphisoft team. The additional expertise will ensure technology leadership in the future with the enhancement of the intelligent building model (BIM). Together with Graphisoft, the Nemetschek Group will further reinforce the position of the alternative data exchange format IFC, which offers customers signi fi cant advantages when forwarding 3D data. With the acquisition of Graphisoft SE on December 31, 2006, sales in the Nemetschek Group will see above-average growth in 2007. The Nemetschek Group expects to grow in line with the general market development this year and next. Consolidated 30 Financial Statements

Group Management ReportConsolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Consolidated Balance Sheet as of December 31, 2006 and as of December 31, 2005

Assets Thousands of € Dec. 31, 2006 Dec. 31, 2005 [Notes]

Current assets Cash and cash equivalents 32,033 28,966 [23] Securities 3,820 0 [23] Trade receivables, net 24,680 14,435 [13] Receivables from associates 0 148 Inventories 814 481 Tax refunded claims for income taxes 2,139 1,917 [14] Prepaid expenses and other current assets 19,509 2,777 [14] Non-current assets classifi ed as held for sale 560 2,075 [14]

Current assets, total 83,555 50,799

Non-current assets Property, plant and equipment 4,508 2,811 [12] Intangible assets 67,043 1,166 [12] Goodwill 43,560 23,734 [12] Shares in associates / fi nancial assets 484 387 [12] Deferred taxes 3,354 1,835 [10] Other non-current assets 1,628 230 [14]

Non-current assets, total 120,577 30,163

Total assets 204,132 80,962

The accompanying notes to these balance sheets are an integral part of these consolidated fi nancial statements. 31

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Equity and liabilities Thousands of € Dec. 31, 2006 Dec. 31, 2005 [Notes]

Current liabilities Short-term loans and current portion of long-term loans 797 702 [19] Trade payables 5,986 3,615 [19] Payments on account 310 64 [19] Provisions and accrued liabilities 12,087 8,780 [18] Deferred income 10,322 6.807 [20] Income taxes 3,692 1,118 [19] Other current liabilities 101,408 9,181 [19] Liabilities directly associated with non-current assets classifi ed as held for sale 0 763 [19]

Current liabilities, total 134,002 31,030

Non-current liabilities Long-term loans without current portion 242 0 [19] Deferred taxes 12,956 1,215 [10] Pension provisions 590 583 [18] Other non-current liabilities 636 0 [19]

Non-current liabilities, total 14,424 1,798

Equity Subscribed capital 9,625 9,625 [16] Capital reserves 41,640 41,354 [17] Revenue reserve 52 52 [17] Currency translation – 2,810 – 1,851 Retained earnings / accumulated loss 5,242 – 2,083 Minority interests (restated) 1,357 1,037

Equity, total 55,106 48,134

Total equity and liabilities 204,132 80,962

The accompanying notes to these balance sheets are an integral part of these consolidated fi nancial statements. Consolidated 32 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Consolidated Income Statement for the period from January 1 to December 31, 2006 and 2005

Thousands of € 2006 2005 [Notes]

Sales 107,481 98,776 [1] Own work capitalized 142 0 [2] Other operating income 1,891 1,555 [3] Operating income 109,514 100,331

Cost of materials / cost of purchased services – 7,672 – 8,663 [4] Personnel expenses – 46,923 – 44,071 [5] Depreciation of property, plant and equipment and amortization of intangible assets – 2,379 – 3,179 [6] Depreciation of property, plant and equipment and amortization of intangible assets due to purchase price allocation – 503 0 [6] Other operating expenses – 34,273 – 31,365 [7] Operating expenses – 91,750 – 87,278

Operating result 17,764 13,053

Interest income 689 865 [9] Interest expenses – 133 –117 [9] Income from associates 211 223 [8] Earnings before taxes 18,531 14,024

Income taxes –4,181 – 1,876 [10]

Net income for the year 14,350 12,148 Of this amount: Equity of the parent company 13,592 11,668

Minority interests 758 480 [11]

14,350 12,148

Earnings per share (basic) in euros 1.41 1.21 [21]

Earnings per share (diluted) in euros 1.41 1.21

Average number of shares outstanding (basic) 9,625,000 9,621,439 Average number of shares outstanding (diluted) 9,650,000 9,621,439

The accompanying notes to these income statements form an integral part of these consolidated fi nancial statements. 33

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Consolidated Cash Flow Statement for the period from January 1 to December 31, 2006 and 2005

Thousands of € 2006 2005 [Notes]

Earnings (before taxes) 18,531 14,024 Amortization and depreciation of non-current assets 2,882 3,179 Change in pension provision 7 170 Non-cash transactions 41 81 Income from associates –211 – 223 Expenses / income from disposal of property, plant and equipment –4 95 Cash fl ow for the period 21,246 17,326

Interest income – 689 – 865 Interest expenses 133 117 Change in other provisions and accruals 1,052 – 246 Change in trade receivables 216 – 1,029 Change in inventories, other assets – 495 – 767 Change in trade payables 108 – 673 Change in other liabilities – 534 671 Cash received from distributions of associates 141 251 Interest received 671 736 Income taxes received 904 0 Income taxes paid – 4,489 – 3,387 Cash fl ow from operating activities 18,264 12,134

Capital expenditure – 2,050 –2,141 Acquisition of entities less purchased cash * 1,390 0 Changes in liabilities from acquisitions – 5,747 0 Cash received from the disposal of non-current assets 69 98 Cash fl ow from investing activities – 6,338 – 2,043

Dividend payments – 6,256 –19,250 Minority interests paid – 397 – 874 Change in liabilities to banks due to acquisitions 1,000 0 Repayment liabilities to banks –78 – 701 Interest paid –76 –117 Cash received from the sale of shares 0 234 Cash fl ow from fi nancing activities –5,807 –20,708

Changes in cash and cash equivalents 6,119 –10,617 Effect of exchange rate differences on cash and cash equivalents – 574 550

Cash and cash equivalents at the beginning of the period 28,966 39,033

Cash and cash equivalents at the end of the period 34,511 28,966 [23]

The accompanying notes to these cash fl ow statements form an integral part of these consolidated fi nancial statements. * Further information see notes on page 43: “The shares purchased were included in the consolidated fi nancial statements for the fi rst time.” Consolidated 34 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Statement of Changes in Group Equity for the period from January 1, 2005 to December 31, 2006

Thousands of € Equity allocable to the parent company‘s shareholders

Subscribed Capital Revenue Currency Retained Total Minority Total capital reserve reserves translation earnings/accu- interests Equity mulated loss

As of January 1, 2005 9,625 46,345 0 –3,037 5,496 58,429 1,497 59,926

Sale of shares 182 52 234 234 Additional share purchases – 5,254 – 5,254 –66 – 5,320 Share-based compensation 81 81 81 Income payment from minority interests 0 – 874 – 874 Difference from currency translation 1,186 3 1,189 1,189 Dividend payments –19,250 – 19,250 –19,250 Net income for the year 11,668 11,668 480 12,148 As of December 31, 2005 9,625 41,354 52 –1,851 –2,083 47,097 1,037 48,134 Additional share purchases 0 –51 –51 Share-based compensation 194 194 194 Issuance costs prior years 92 92 92 Income payment from minority interests –10 –10 – 387 – 397 Difference from currency translation – 960 – 960 – 960 Dividend payments – 6,256 – 6,256 – 6,256 Net income for the year 13,592 13,592 758 14,350 As of December 31, 2006 9,625 41,640 52 –2,811 5,243 53,749 1,357 55,106

The accompanying notes to these statements of changes in equity form an integral part of these fi nancial statements. Changes in Group equity are explained in notes [15, 16, 17]. 35

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Notes to the Consolidated Financial Statements for the Fiscal Year 2006

The Company The Nemetschek Group is one of the leading solution providers in the world of information technology and consulting services for the design, construction and management of buildings and real estate. Its standard software solutions, available in 16 languages, are used by more than 270,000 companies in 142 countries. These IT solutions create synergies and optimize the overall building creation and management process in terms of quality, cost and time.

The full solution offering spans the entire planning, construction and management process. As such, it is a mediator and a link between the world of information technology and the specialist world of building clients, architects, engineers, construction companies as well as facility and real estate managers. The Group is also active in the fi elds of visualization and animation for multimedia software.

Nemetschek AG was founded on September 10, 1997 by conversion of Nemetschek GmbH and has been listed on the German Stock Exchange in Frankfurt since March 10, 1999, and in the Prime Standard segment since January 1, 2003. The registered offi ce of Nemetschek AG is at 81829 Munich, Germany, Konrad-Zuse-Platz 1. The annual report for 2006 can be obtained there.

Information on the German Corporate Governance Code The declaration of compliance was submitted in March 2006 and can be accessed by the shareholders on the homepage of Nemetschek Aktiengesellschaft (www.nemetschek.de / ir).

General As in the prior year, the consolidated fi nancial statements for the year ending December 31, 2006, are prepared in accordance with International Financial Reporting Standards (IFRSs), as required to be applied in the EU, and the provisions of German commercial law to be applied additionally pursuant to Sec. 315a (1) HGB [‘Handelsgesetzbuch’: German Commercial Code]. The Company is listed in the Prime Standard segment of the stock exchange and applies the provisions of Sec. 315a HGB, and is thus exempt from the provisions of Secs. 290 et seq. HGB to prepare consolidated fi nancial statements. The group management report has been prepared in accordance with Sec. 315 HGB.

The accounting policies used generally correspond to the methods applied in the prior year. In addition the Group has applied the new / revised standards that are binding for fi scal years beginning on or after January 1, 2006. Consolidated 36 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

The following IFRS standards and interpretations are binding for the fi rst time for the fi scal year beginning on January 1, 2006. These result in changes in the accounting policies for Nemetschek Aktiengesellschaft as well as changed disclosures in the notes:

IAS 39 Revision of “Financial Instruments: Recognition and Measurement” IFRIC 4 “Determining whether an Arrangement contains a Lease” IFRIC 5 “Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds” IFRIC 6 “Liabilities arising from Participating in a Specifi c Market – Waste Electrical and Electronic Equipment”

The Group decided not to early adopt the following standards and IFRIC interpretations which have already been issued but have not entered into force yet. Generally speaking, Nemetschek Aktiengesellschaft intends to adopt all standards when their adoption becomes mandatory for the fi rst time.

IFRSs and IFRIC interpretations adopted by the EU in the comitology procedures, which have not yet entered into force, are:

IFRS 7 “Financial Instruments: Disclosures” IAS 1 Revision of “Presentation of Financial Statements” IFRIC 7 “Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinfl ationary Economies” IFRIC 8 “Scope of IFRS 2” IFRIC 9 “Reassessment of Embedded Derivatives”

The principal effects of these amendments are discussed below.

Amendments to IAS 39 – Fair Value Option and Cash Flow Hedge Accounting The amendments are applicable for fi scal years beginning on or after January 1, 2006. The amendments restrict the possibility to measure each fi nancial asset or each fi nancial liability at fair value through the income statement. There were no effects on the consolidated fi nancial statements of Nemetschek Aktiengesellschaft.

Amendments to IAS 39 – Accounting of Hedges of Forecast Intragroup Transactions This amendment to IAS 39 permits the foreign currency risk of a highly probable forecast intragroup transaction to qualify as the hedged item in a cash fl ow hedge in the consolidated fi nancial statements, provided that the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction and that the foreign currency risk will affect the consolidated income statement. The amendments did not affect recognition and measurement.

Amendments to IAS 39 and IFRS 4 – Financial Guarantee Contracts Following the revision of IAS 39 and IFRS 4, fi nancial guarantees fall under the scope of IAS 39 only. In the past, fi nancial guarantees had been subject – depending on their structure – either to IAS 39 or to IFRS 4. The amendment is applicable for fi scal years beginning on or after January 1, 2006. As the Group does not have any such guarantees at present, no effects were noted. 37

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

IFRIC 4 “Determining whether an Arrangement contains a Lease” This interpretation is applicable for the fi rst time for fi scal years beginning on or after January 1, 2006. It provides guidance in determining whether arrangements contain a lease to which lease accounting must be applied. Application of IFRIC 4 did not result in any effects on the consolidated fi nancial statements of Nemetschek Aktiengesellschaft.

IFRIC 5 “Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds” This interpretation is applicable for the fi rst time for fi scal years beginning on or after January 1, 2006. It sets out the accounting treatment for funds set up to fi nance the decommissioning of assets. Application of IFRIC 5 did not result in any effects on the consolidated fi nancial statements of Nemetschek Aktiengesellschaft.

IFRIC 6 “Liabilities arising from Participating in a Specifi c Market – Waste Electrical and Electronic Equipment” This interpretation is applicable for the fi rst time for fi scal years beginning on or after January 1, 2006. It prescribes the date on which recognition of a liability is required for the disposal of electrical and electronic equipment in accordance with the provisions of the EU Directive relating to the disposal of Waste Electrical and Electronic Equipment. Application of IFRIC 6 did not result in any effects on the consolidated fi nancial statements of Nemetschek Aktiengesellschaft.

IFRS 7 “Financial Instruments: Disclosures” IFRS 7 governs the disclosure requirements for fi nancial instruments for industrial entities as well as banks and similar fi nancial institutions. IFRS 7 replaces IAS 30 “Disclosures in the Financial Statements of Banks and Similar Financial Institu- tions” as well as the disclosure requirements contained in IAS 32 “Financial Instruments: Disclosure and Presentation”. IFRS 7 is applicable for fi scal years beginning on or after January 1, 2007. Management had not completed the analysis of the effects of this standard by the time the consolidated fi nancial statements were prepared.

Amendments to IAS 1 “Presentation of Financial Statements” The additional disclosure requirements resulting from the amendment of IAS 1 “Presentation of Financial Statements” were not observed voluntarily in the consolidated fi nancial statements. The amendments will mainly relate to additional disclosures concerning the Group’s objectives, policies and processes for managing capital. The amendments are applicable for fi scal years beginning on or after January 1, 2007.

IFRIC 7 “Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinfl ationary Economies” This interpretation is applicable for the fi rst time in fi scal years beginning on or after March 1, 2006 and contains ex- planations on IAS 29 on the question of adjusting the fi nancial statements in the event that the functional currency of an entity is qualifi ed as highly infl ationary for the fi rst time. It is not expected to have any effects on the consolidated fi nancial statements.

IFRIC 8 “Scope of IFRS 2” This interpretation is applicable for the fi rst time for fi scal years beginning on or after May 1, 2006. It requires IFRS 2 to be applied to any arrangements where equity instruments are issued for consideration which appears to be less than fair value. The Group will apply the amendments for the fi rst time in the fi scal year 2007. The interpretation is not expected to have any effects on the consolidated fi nancial statements. Consolidated 38 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

IFRIC 9 “Reassessment of Embedded Derivatives” This interpretation is applicable for fi scal years beginning on or after June 1, 2006. IFRIC 9 deals with special issues sur- rounding accounting for embedded derivatives pursuant to IAS 39. IFRIC 9 requires that the assessment of whether any embedded derivatives contained in a contract are required to be separated from the host contract and accounted for as derivatives must take place upon concluding the contract. A reassessment during the term of the contract is only permitted if the underlying contractual conditions and the associated cash fl ows change signifi cantly. The extent to which the payments from the embedded derivative and / or the host contract have changed compared to the original cash fl ows is taken as the basis here. IFRIC 9 is not expected to have any material effects on the consolidated fi nancial statements.

IFRSs and IFRIC interpretations which have not yet entered into force and have not been adopted by the EU in the comitology procedures:

IFRS 8 “Operating Segments” IFRIC 10 “Interim Financial Reporting and Impairment” IFRIC 11 “IFRS 2 - Group and Treasury Share Transactions” IFRIC 12 “Service Concession Arrangements”

IFRS 8 “Operating Segments” IFRS 8 replaces IAS 14 “Segment Reporting” and brings the standards of the IASB into line with the provisions of the Statement of Financial Accounting Standards (SFAS) 131. IFRS 8 requires the disclosure of fi nancial and narrative information on the reportable segments. Reportable segments are either operating segments or groups of operating segments which satisfy certain criteria. Operating segments are components of an entity for which discrete fi nancial information is available and whose operating results are regularly reviewed by the entity‘s chief operating decision maker to make decisions about resources to be allocated to the segment and assess performance. In general, the fi nancial information has to be reported on the basis of the internal control concept used to assess the operating segments (management approach). The standard is applicable for the fi rst time for fi scal years beginning on or after January 1, 2009. Early adoption is permitted. The Group had not completed the analysis of the effects of this amendment by the time the consolidated fi nancial statements were prepared.

IFRIC 10 “Interim Financial Reporting and Impairment” This interpretation deals with the alleged contradiction between the provisions of IAS 34 “Interim Reporting” and those in other standards pertaining to the recording and repetition of impairment expenses in the fi nancial statements for goodwill and certain fi nancial assets. IFRIC 10 states that an entity must not reverse impairment losses recognized in an interim period on goodwill and investments in equity instruments and in fi nancial assets carried at cost and that an entity may not extend this resolution by analogy to other areas where there may be contradictions between IAS 34 and other standards. IFRIC 10 is applicable for fi scal years beginning on or after November 1, 2006. Earlier adoption is encouraged. IFRIC 10 is not expected to have any effects on the consolidated fi nancial statements. 39

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

IFRIC 11 “IFRS 2 - Group and Treasury Share Transactions” This interpretation addresses the question of how IFRS 2 “Share-based Payment” applies to share-based payment arrangements involving the entity’s own equity instruments or equity instruments of another group entity. IFRIC 11 is effective for reporting periods beginning on or after March 1, 2007. Early adoption is permitted. IFRIC 11 is not expected to have any effects on the consolidated fi nancial statements.

IFRIC 12 “Service Concession Arrangements” The scope of IFRIC 12 is limited to accounting for public concessions (e.g. for the operation of motorways or hospitals) from the perspective of the licensee and relates solely to arrangements with public licensors. IFRIC 12 is mandatory for fi scal years beginning on or after January 1, 2008. This interpretation is not relevant for the business operations of the Group.

Balance Sheet Classifi cation: The balance sheet items are classifi ed into current and non-current assets and liabilities in accordance with IAS 1. Items not due within a year are disclosed as non-current assets or non-current liabilities. In addition, deferred taxes are disclosed as non-current assets or liabilities.

The consolidated fi nancial statements have been prepared on the basis of the historical cost convention, apart from fi nancial assets held for trading or classifi ed as available for sale. These are reported at fair value.

The income statement has been prepared using the nature of expense method.

The currency used in the consolidated fi nancial statements is EUR; in the notes the fi gures are stated in thousands of euros (kEUR) unless otherwise specifi ed.

Consolidated Group The consolidated fi nancial statements include Nemetschek Aktiengesellschaft and all of the foreign and domestic subsidiaries. Associates are valued using the equity method. The subsidiaries included in the consolidated fi nancial statements and the entities valued at equity are listed below: Consolidated 40 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

The following affi liated entities have been included in the consolidated fi nancial statements:

Name, registered offi ce of the entity Thousands of € Shareholding Equity Net income / loss in % Dec. 31, 2006 for the year 2006

Nemetschek Aktiengesellschaft, Munich 66,717 7,035

Direct equity investments

Design division Nemetschek Deutschland GmbH, Munich 100.00 3,004 317 Nemetschek Technology GmbH, Munich 100.00 2,000 1,899 NEMETSCHEK NORTH AMERICA Inc., Columbia, Maryland, USA 100.00 14,580 3,477 NEMETSCHEK FRANCE SARL, Asnières, France 100.00 773 564 Nemetschek Fides & Partner AG, Wallisellen, Switzerland 81.00 709 304 NEMETSCHEK ITALIA SRL, Trento, Italy 100.00 542 –31 NEMETSCHEK ESPANA S.A., Madrid, Spain 100.00 – 148 –100 NEMETSCHEK (UK) Ltd., London, UK 100.00 – 500 –3 NEMETSCHEK s.r.o., Prague, Czech Republic 100.00 17 17 NEMETSCHEK kft., Budapest, Hungary 100.00 57 6 NEMETSCHEK OOO, Moskow, Russia 100.00 – 233 10 Friedrich + Lochner GmbH, Stuttgart 100.00 51 1,463 Campus Technology Fund, Heverlee, Belgium 100.00 418 46 Software Adventure Cv, Herk-de-Stad, Belgium 54.54 564 –1 Glaser ISB CAD Programmsysteme GmbH, Wennigsen 70.00 1,337 651 Graphisoft SE European Company Limited by Shares, Budapest, Hungary 56.21 9,161 –4,241 DACODA GmbH, Rottenburg 51.00 65 30

Build division Nemetschek Bausoftware GmbH, Achim 95.00 1,417 604 ING. AUER – Die Bausoftware GmbH, Mondsee, Austria 49.90 2,519 2,243

Manage division Nemetschek CREM Solutions GmbH & Co. KG, Ratingen 100.00 – 1,381 195 Nemetschek CREM Verwaltungs GmbH, Munich 100.00 60 1

Multimedia division MAXON Computer GmbH, Friedrichsdorf 70.00 2,008 1,157

Other Nemetschek Austria Beteiligungen GmbH, Mondsee, Austria 100.00 461 –213 Nemetschek Verwaltungs GmbH, Munich 100.00 26 0 41

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Continuation:

Name, registered offi ce of the entity Thousands of € Shareholding Equity Net income / loss in % Dec. 31, 2006 for the year 2006

Indirect equity investments

Design division NEMETSCHEK Ges.m.b.H., Wals, Austria, via Nemetschek Austria Beteiligungen GmbH 100.00 321 174 Nemetschek Engineering GmbH, Wals, Austria, via Nemetschek Austria Beteiligungen GmbH 100.00 636 451 NEMETSCHEK Slovensko s.r.o., Bratislava, Slovakia, via Nemetschek Technology GmbH 100.00 132 –15 Via Campus Technology Fund, Heverlee, Belgium and Software Adventure Cv, Herk-de-Stad, Belgium: SCIA International NV, Herk-de-Stad, Belgium 78.84 1,482 2 SCIA Group NV, Herk-de-Stad, Belgium 100.00 1,447 495 SCIA W + B Software BV, Arnhem, Netherlands 100.00 59 159 SCIA Sarl, Roubaix, France 100.00 –44 –36 SCIA Cz s.r.o., Brno, Czech Republic 100.00 46 –113 SCIA Sk s.r.o., Zilina, Slovakia 100.00 191 68 SCIA MAPS SA, Gurmels, Switzerland 100.00 –24 –13 Via Graphisoft SE European Company Limited by Shares, Budapest, Hungary: Graphisoft R & D Számitástechnikai, Fejlesztö zrt., Budapest, Hungary 85.80 45,558 7,000 Graphisoft CAD Studio Kft., Budapest, Hungary 92.00 251 –73 Graphisoft Deutschland GmbH, Munich 100.00 – 759 –182 Graphisoft USA Inc., Massachusetts, Newton, USA 100.00 – 4,290 379 Graphisoft Japan KK, Tokyo, Japan 100.00 –614 –106 Graphisoft Spain SL, Madrid, Spain 100.00 –105 20 Graphisoft UK Ltd., Surrey, UK 100.00 – 2,665 – 382 Graphisoft Finland Oy, Helsinki, Finland 100.00 – 227 – 284

Build division ING. AUER – Die Bausoftware GmbH, Mondsee, Austria, via Nemetschek Austria Beteiligungen GmbH 50.10 2,519 2,243

Multimedia division MAXON COMPUTER Inc., Thousand Oaks, California, USA via Maxon Computer GmbH 63.00 518 311 MAXON Computer Ltd., Bedford, UK, via Maxon Computer GmbH 63.00 –79 70

The net income for the year recorded by Nemetschek Technology GmbH and Friedrich + Lochner GmbH is shown prior to the profi t and loss transfer agreement with Nemetschek Aktiengesellschaft in each case. Consolidated 42 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Associates recognized according to the equity method:

Name, registered offi ce of the entity Thousands of € Shareholding Equity Net income / loss in % Dec. 31, 2006 for the year 2006

DocuWare Aktiengesellschaft, Germering 30.00 3,906 704

Other disclosures on DocuWare AG Dec. 31, 2006 Dec. 31, 2005 Assets 7,699 7,577 Liabilities 3,793 3,980 Revenue 6,812 7,360 Net income for the year 704 744

Financial assets

Name, registered offi ce of the entity Thousands of € Shareholding Equity Net income / loss in % Dec. 31, 2006 for the year 2006

Sidoun GmbH, Freiburg i. Breisgau * 16.26 – 1,640 903 Sidoun international GmbH, Freiburg i. Breisgau * ** 16.40 25 0 NEMETSCHEK EOOD, Sofi a, Bulgaria 20.00 609 271 rivera GmbH, Karlsruhe via Nemetschek Bausoftware GmbH 20.00 25 –28

* Non-calendar fi scal year as of June 30, 2006 ** Newly founded; as of June 28, 2006

The information about the entities corresponds to the local seperate fi nancial statements, translated into kEUR.

The assumption that signifi cant infl uence is exercised on the fi nancial assets in which voting rights of 20 % or more are held does not hold true for NEMTSCHEK EOOD, Sofi a, Bulgaria, or rivera GmbH, Karlsruhe, as infl uence is neither exercised on management nor in the form of a governing body. Also, there are no material business relationships and no infl uence is exercised beyond the mere capital investment. The fi nancial assets constitute mere capital investments.

In the fi scal year 2006, a 33 % share in TraiCen IT Training & Consulting GmbH, Munich, was sold at a profi t of kEUR 10.

Changes in the Consolidated Group The composition of the entities included in the consolidated fi nancial statements changed during the course of the fi scal year 2006.

acadGraph CAD Studio GmbH, Munich 100 % of the shares in acadGraph CAD Studio GmbH, Munich, were sold as of January 31, 2006. The deconsolidation result amounted to kEUR 152. This did not impact the cash and cash equivalents. 43

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

The shares purchased in the following entities were included in the consolidated fi nancial statements for the fi rst time:

SCIA Group NV, Herk-de-Stad, Belgium By purchase agreement dated February 14, 2006, Nemetschek AG purchased a total of 78.84 % in SCIA International NV, Herk-de-Stad, Belgium, which acts as a holding for subsidiaries of the SCIA group. This purchase was made via Campus Technology Fund, Heverlee, Belgium, and Software Adventure Cv, Herk-de-Stad, Belgium. The date of acquisition is Febru- ary 28, 2006. The shareholdings in the subgroup to be included in the consolidated group of Nemetschek AG are as follows:

Campus Technology Fund, Heverlee, Belgium 100.00 % Software Adventure Cv, Herk-de-Stad, Belgium 54.54 % SCIA International NV, Herk-de-Stad, Belgium 78.84 % SCIA Group NV, Herk-de-Stad, Belgium 100.00 % SCIA W+B Software BV, Arnhem, Netherlands 100.00 % SCIA Sarl, Roubaix, France 100.00 % SCIA Cz s.r.o., Brno, Czech Republic 100.00 % SCIA Sk s.r.o., Zilina, Slovakia 100.00 % SCIA MAPS SA, Gurmels, Switzerland 100.00 %

The cost of the combination amounted to kEUR 4,330, of which kEUR 202 related to incidental acquisition costs.

Nemetschek Aktiengesellschaft granted a put option to the minority shareholders to purchase the remaining shares of 21.16 %. The average EBITA over three years is used to measure the put option. A discounted liability of kEUR 1,101 was posted accordingly as of December 31, 2006. The option cannot be exercised until the fi scal year 2009 at the earliest. Minority interests are recognized in other liabilities and not in equity and the income statement.

Consolidated 44 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

The fair values of the identifi able assets and liabilities of SCIA Group NV, Herk-de-Stad, Belgium, at the time of acquisition (February 28, 2006) and the corresponding carrying amounts directly before acquisition are as follows:

Thousands of € Carrying amount Fair value as of February as of February 28, 2006 28, 2006

Cash and cash equivalents 645 645 Inventories and other assets 219 219 Trade receivables 2,641 2,641 Property, plant and equipment 885 1,140 Intangible assets 0 3,700 Goodwill 255 0 4,645 8,345 Trade payables 573 573 Other liabilities and other equity items 2,669 2,669 Provisions 255 255 Deferred tax liabilities 0 1,305 3,497 4,802 Net assets 1,148 3,543 Goodwill arising on acquisition 1,888 Total consideration * 5,431

Cash fl ow on the acquisition: Net-cash acquired from the subsidiary 645 Cash paid – 3,986 Net cash outfl ow – 3,341

* including liability from the put option of kEUR 1,101.

The goodwill from the acquisition of kEUR 1,888 includes the fair value of the expected strengthened market position and the expected continuation of growth.

SCIA Group NV, Herk-de-Stad, Belgium, has contributed a fi gure of kEUR 338 to the Group’s operating result since the date of acquisition. If the acquisition had already taken place at the beginning of the year, revenue of the Group for the twelve months would have increased by kEUR 8,157 and the earnings of the Group for the twelve months would have risen by kEUR 165. 45

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

The fair value adjustments due to the preliminary calculation of the purchase price allocation are as follows:

Thousands of € Fair value Useful life Annual adjustments in years write-downs

Land, property, plant and equipment 255 n / a 0 Software 1,000 3 333 Customer relationships 2,700 10 270 Intangible assets 3,700 603 Elimination of goodwill * – 255 Deferred tax liabilities 1,305 Total difference before goodwill 2,395

* The carrying amount of goodwill is attributed to the goodwill from the acquisition.

A capital market based approach (DCF method = discounted cash fl ow) was chosen to calculate the fair value of the intangible asset software. This involved adding a hypothetical license fee to the expected revenue. The fi rst step was to estimate the future duration of customer relationships to calculate the fair value of this item. Then the future expected revenue was calculated less expected maintenance and repair costs in connection with customer relationships, taking future expected margins into account.

The preliminary purchase price allocation is based on the calculation of the outstanding minority interests.

DACODA GmbH, Rottenburg By purchase agreement dated August 17, 2006, Nemetschek AG acquired 51 % of the shares in DACODA GmbH, Rotten- burg. The purchase price amounted to EUR 12,750.00.

Nemetschek Aktiengesellschaft granted a put option to the minority shareholders to purchase the remaining 49 %. The average EBIT over three years is used to measure the put option. A discounted liability of kEUR 160 was posted accor d- ingly as of December 31, 2006. The option cannot be exercised until the fi scal year 2009 at the earliest. Then the future expected revenue was calculated less expected maintenance and repair costs in connection with customer relationships, taking future expected margins into account. The carrying amounts and fair values on the acquisition date (August 17, 2006) for 100 % are as follows: Consolidated 46 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Thousands of € Carrying amount Fair value as of August 17, as of August 17, 2006 2006

Cash and cash equivalents 56 56 Inventories and other assets 67 67 Trade receivables 227 227 Property, plant and equipment 188 188 538 538 Trade payables 438 438 Other liabilities and other equity items 64 64 502 502 Net assets 36 36 Goodwill arising on acquisition 141 Total cost * 177

Cash fl ow on the acquisition: Net-cash acquired from the subsidiary 56 Cash paid –13 Net-cash infl ow 43

* including liability from the put option of kEUR 160.

The goodwill from the acquisition of kEUR 141 includes the fair value of the expected strengthened market position.

DACODA GmbH, Rottenburg, has contributed a fi gure of kEUR 56 to the Group’s operating result since the date of acquisition. If the acquisition had already taken place at the beginning of the year, sales of the Group for the twelve months would have increased by kEUR 572 and the earnings of the Group for the twelve months would have risen by kEUR 39.

Graphisoft SE European Company Limited by Shares, Budapest, Hungary On December 21, 2006, Nemetschek Aktiengesellschaft presented a call option for a share package of selected shares of Graphisoft SE European Company Limited by Shares, Budapest, Hungary. Nemetschek AG exercised the call option on De- cember 31, 2006 and purchased a total of 54.3 % of the shares in Graphisoft SE. This corresponds to 5,774,924 shares. Each purchase price per share was EUR 9. The cost thus totaled EUR 54 million, of which EUR 2 million concerned incidental acquisition costs. After taking into account the treasury shares (358,369) of Graphisoft SE European Company Limited by Shares, Budapest, Hungary, the shareholding of Nemetschek Aktiengesellschaft amounts to 56.21 %. . 47

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

The shareholdings in the subgroup to be included in the consolidated group of Nemetschek Aktiengesellschaft are as follows:

Graphisoft SE European Company Limited by Shares, Budapest, Hungary 56.21 % Graphisoft R&D Számitástechnikai Fejlesztö zrt., Budapest, Hungary 85.80 % Graphisoft CAD Studio Kft., Budapest, Hungary 92.00 % Graphisoft Deutschland GmbH, Munich 100.00 % Graphisoft USA Inc., Massachusetts, Newton, USA 100.00 % Graphisoft Japan KK, Tokyo, Japan 100.00 % Graphisoft Spain SL, Madrid, Spain 100.00 % Graphisoft UK Ltd., Surrey, UK 100.00 % Graphisoft Finland Oy, Helsinki, Finland 100.00 %

The fair values of the identifi able assets and liabilities of Graphisoft SE European Company Limited by Shares, Budapest, Hungary, at the time of acquisition (December 31, 2006) and the corresponding carrying amounts directly before acquisition are as follows:

Thousands of € Carrying amount Fair value as of December as of December 31, 2006 31, 2006

Cash and cash equivalents 4,688 4,688 Securities 1,342 1,342 Inventories and other assets 17,800 17,800 Trade receivables 7,406 7,406 Property, plant and equipment 886 886 Intangible assets 220 62,720 Equity investments 50 50 Deferred tax assets 1,071 1,071 33,463 95,963 Trade payables 1,252 1,252 Liabilities to minority interests 0 33,587 Other liabilities and other equity items 7,600 14,565 Provisions 400 400 Deferred tax liabilities 32 10,032 9,284 59,836 Net assets 24,179 36,127 Goodwill arising on acquisition 17,847 Total consideration 53,974 Cash fl ow on the acquisition: Net-cash acquired from the subsidiary 4,688 Cash paid 0 Net cash infl ow 4,688

The cash and cash equivalents acquired comprise bank balances (kEUR 4,688). The other liabilities and other equity items contain a bank loan of kEUR 153. Consolidated 48 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

The goodwill from the acquisition of kEUR 17,847 includes the fair value of the expected strengthened market position and the expected continuation of growth.

Graphisoft SE European Company Limited by Shares, Budapest, Hungary, has not made any contribution to the Group’s earnings since the date of acquisition. If the acquisition had already taken place at the beginning of the year, sales of the Group for the twelve months would have increased by kEUR 30,507 and the earnings of the Group for the twelve months would have fallen by kEUR 1,259. In the fi scal year 2006, the operating result of Graphisoft SE amounted to kEUR - 628, comprising the Architecture (kEUR 7,014) and Constructor (kEUR – 7,642) areas.

The fair value adjustments were as follows:

Thousands of € Fair value Useful life Annual adjustments in years write-downs

Brand name 5,300 15 353 Trademarks 2,800 10 280 Software 27,100 7 3,871 Customer Relationships 27,300 12 2,275 Intangible assets 62,500 6,779 Liabilities to minority interests 33,587 Other liabilities and other equity items 6,965 Deferred tax liabilities 10,000 Total difference before goodwill 11,948

It is possible to acquire up to 100 % of the shares in Graphisoft SE European Company Limited by Shares, Budapest, Hun- gary, by means of the public purchase offer for the remaining 43.79 %. In the event that Nemetschek Aktiengesellschaft acquires 100 % of the shares in Graphisoft SE European Company Limited by Shares, Budapest, Hungary, the fi nancial volume will amount to EUR 95 million plus incidental costs. The fi nancing would be provided by a credit facility arranged in three tranches from WestLB AG, Düsseldorf. Assuming that Nemetschek Aktiengesellschaft actually acquires 100 % of the shares, 20 % will be fi nanced using the Company’s own funds (see repayment conditions for ‘Bridge fi nancing’).

The relief from royalty approach was chosen to calculate the fair value of the brand name and trademark. A hypothetical license fee was added to future extrapolated revenue accordingly. The relief from royalty approach was also used to calculate the fair value of the intangible asset software. This involved adding a hypothetical license fee to the expected revenue. The fi rst step was to estimate the future duration of customer relationships to calculate the fair value of this item. Then the future expected revenue was calculated less expected maintenance and repair costs in connection with customer relationships, taking future expected margins into account.

The other liabilities relate to stock options granted by Graphisoft SE to Graphisoft employees before the acquisition by Nemetschek Aktiengesellschaft.

The preliminary purchase price allocation is based on the calculation of the outstanding minority interests. 49

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

The structure of the fi nancing is as follows:

The borrowers are Nemetschek Aktiengesellschaft, Munich, and Nemetschek Technology GmbH, Munich.

Purpose Financing of the acquisition of at least 50.01 % of the shares in Graphisoft SE European Company Limited by Shares, Budapest, Hungary, from existing major shareholders as well as a public tender to purchase the shares outstanding.

Security has been provided in the form of the shares purchased by Nemetschek Aktiengesellschaft in Graphisoft SE Euro- pean Company Limited by Shares, Budapest, Hungary, that are deposited and pledged at WestLB AG, Düsseldorf.

Source of funds Millions of € Term Repayment Interest rate Availability Other

TRANCHE 1 Bridge At the end of the Security: bank fi nancing term and max. balance of EUR EUR 5 million per 20 million with Sept. 30, interest period EURIBOR March 31, monthly substan- 20 2007 prematurely plus 1.0 % 2007 tiation Half-yearly TRANCHE 2 installments of Term loan EUR 3.5 million and max. EUR 5 million per Dec. 31, interest period EURIBOR March 31, 35 2011 prematurely plus 1.5 % 2007

TRANCHE 3 Per withdrawal If the entire Revolving credit at the end of the tranche is not facility respective inte- utilized: EUR 10 rest period, no million possible Dec. 31, later than at the EURIBOR During the as a working 45 2011 end of the term plus 1.5 % entire term capital loan

Total 100

Obligatory special repayment If a total of more than EUR 80 million is drawn in the course of the acquisition, EUR 7 million of the borrowers’ income obtained by Graphisoft SE European Company Limited by Shares, Budapest, Hungary, through repayment of a loan, EUR 12.5 million of which was granted to Graphisoft Park Ingatlanfejlesztö Kft., Budapest, Hungary, will be used to repay outstanding drawings on tranche 3. This reduces tranche 3 decreases accordingly. Consolidated 50 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Goodwill Goodwill in connection with the afore-mentioned acquisitions developed as follows:

Thousands of € 2006 2005

Amount carried forward as of January 1 23,734 23,273 Additions 20,328 0 Disposals 0 - 180 Currency differences – 502 641 Balance as of December 31 43,560 23,734

Additions break down as follows:

Thousands of € 2006

Graphisoft SE European Company Limited by Shares, Budapest, Hungary 17,847 SCIA Group NV, Herk-de-Stad, Belgium 1,888 Nemetschek Bausoftware GmbH, Achim 452 DACODA GmbH, Rottenburg 141 Total additions goodwill 20,328

The impairment-only approach is used pursuant to IFRS 3. No impairment was recorded on goodwill in the fi scal year.

The goodwill acquired from business combinations was allocated to the cash-generating unit for impairment testing. The cash-generating unit is the group entity in each case.

Carrying amounts of the goodwill allocated to the respective cash-generating units:

Thousands of € 2006 2005

Graphisoft SE European Company Limited by Shares, Budapest, Hungary 17,847 0 ING. AUER – Die Bausoftware GmbH, Mondsee, Austria 6,486 6,486 Nemetschek Bausoftware GmbH, Achim 5,485 5,033 NEMETSCHEK NORTH AMERICA Inc., Columbia, Maryland, USA 4,377 4,879 MAXON Computer GmbH, Friedrichsdorf 3,008 3,008 Nemetschek CREM Solutions GmbH & Co. KG, Ratingen 2,028 2,028 SCIA Group NV, Herk-de-Stad, Belgium 1,888 0 Friedrich + Lochner GmbH, Stuttgart 1,293 1,293 Glaser ISB CAD Programmsysteme GmbH, Wennigsen 697 697 DACODA GmbH, Rottenburg 141 0 Other 310 310 Total goodwill 43,560 23,734 51

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

The carrying amounts of the goodwill allocable to Graphisoft SE European Company Limited by Shares, Budapest, Hungary, ING. AUER – Die Bausoftware GmbH, Mondsee, Austria, Nemetschek Bausoftware GmbH, Achim, and NEMETSCHEK NORTH AMERICA Inc., Columbia, Maryland, USA, are material compared to the total carrying amount of goodwill.

The recoverable amount of the cash-generating unit of the respective group entity is based on a calculation of its value in use derived from the cash fl ow projections for the next four years based on the fi nancial planning approved by management. The discount rate used for the cash fl ow projections ranges between 7.95 % and 9.65 % (prior year: between 6.26 % and 9.23 %). Cash fl ows after the period of four years are stated as perpetual annuity. When calculating the values for perpetual annuity, growth deductions of 2 to 5 % were assumed for the purpose of calculating the value in use to test the goodwill for impairment. This procedure was used for all carrying amounts.

The basic assumptions for the material cash-generating units are explained below, on the basis of which management has prepared its cash fl ow projections to test the goodwill for impairment.

Planned sales development / gross profi t margin: For the purpose of this valuation, management bases its projections on those customary for the industry. The developments in the prior fi scal year are taken into account. The markets are expected to develop in a similar manner to the prior year.

Increase in personnel expenses It is assumed that the cost of employee remuneration will refl ect industry developments.

Capital expenditures Replacement investments are planned for the amount of annual depreciation and amortization. Consolidated 52 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

The following newly founded entities and shares purchased in the following entities were included in the consolidated fi nancial statements in the prior year of Nemetschek Aktiengesellschaft:

Nemetschek Engineering GmbH, Wals, Austria, was founded on February 21, 2005 Nemetschek Austria Beteiligungen GmbH, Mondsee, Austria, was founded on June 14, 2005 Nemetschek Bausoftware GmbH, Achim, acquired an equity investment in the newly founded rivera GmbH, Karlsruhe, as of December 21, 2005 The newly founded Nemetschek Austria Beteiligungen GmbH, Mondsee, Austria, purchased the remaining shares in ING. AUER – Die Bausoftware GmbH, Mondsee, Austria, for a purchase price of kEUR 5,295 on August 18, 2005 The remaining 0.25 % in Nemetschek CREM Solutions GmbH & Co. KG, Ratingen, was purchased on November 30, 2005 for a purchase price of kEUR 8.

The following newly founded entities and shares purchased in the following entities were included in the consolidated fi nancial statements in the prior year of Graphisoft SE:

Graphisoft SE European Company Limited by Shares, Budapest, Hungary, acquired 100 % of Dynamic Solution Systems Oy Helsinki, Finland (now: Graphisoft Finland Oy) for a purchase price of EUR 2.6 million on September 1, 2005. There is a contingent liability of EUR 3.2 million as of December 31, 2006.

Consolidation Principles The consolidated fi nancial statements of the Group include Nemetschek Aktiengesellschaft, Munich, and the entities that it controls. Control is assumed if the Group owns, either directly or indirectly, more than half of the voting rights of an entity and is able to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities. The net income / loss and equity of the consolidated subsidiaries allocable to minority interests are shown separately in the income statement and in equity.

The purchase method of accounting is used for the consolidation of capital of newly acquired entities. The cost of the business combination is allocated to the identifi able assets acquired and the identifi able liabilities and contingent liabilities assumed in accordance with their fair values at the acquisition date. Any excess of the cost of the business combination over the interest of the Group in the fair value of the identifi able assets, liabilities and contingent liabilities acquired is reported as goodwill. Entities acquired or disposed of during the year are included in the consolidated fi nancial statements from the date of the acquisition or until the date of disposal.

Investments in associates (generally equity investments of between 20 % and 50 % in an entity’s equity) where a signifi - cant infl uence is exercised by Nemetschek Aktiengesellschaft are accounted for using the equity method. Investments in associates are remeasured when there is an indication that the investment has been impaired or the reason for impairment losses recognized in prior years no longer exists.

Intercompany balances and transactions, including intercompany profi ts, are eliminated. The fi nancial statements of domestic and foreign entities included in the consolidation are prepared using uniform accounting policies.

Use of Estimates when Preparing the Consolidated Financial Statements The preparation of the consolidated fi nancial statements requires management to make estimates and assumptions in conformity with IFRS that affect the reported amounts of assets and liabilities, the disclosures in the notes and the amounts reported in the income statement. Actual results may diverge from these estimates. 53

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating a value in use amount requires management to make an estimate of the expected future cash fl ows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash fl ows.

Development costs are capitalized in accordance with the accounting policy presented in the notes. Determining the amounts to be capitalized requires management to make assumptions regarding the expected future cash generation of the assets, discount rates to be applied and the expected period of benefi ts.

Currency Translation Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. All monetary assets and liabilities are translated at closing rate. Exchange rate differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the period are recognized as other operating income or other operating expenses in the period in which they arise.

The foreign equity investments in the consolidated group are independent from a fi nancial, economic and organizational perspective. These are thus regarded as foreign entities. Their reporting currencies are the respective local currencies. The balance sheets of foreign consolidated equity investments are translated at year-end exchange rates (including goodwill). The income statements are translated at the exchange rates in place on the dates of the transactions. All resulting translation differences are included in a reserve for currency translation in equity.

The following exchange rates are used for currency translation involving currencies in countries outside the euro zone:

Currency Average Exchange rate as Average Exchange rate as exchange rate in of December 31, exchange rate in of December 31, 2006 2006 2005 2005

EUR / USD 1.26 1.32 1.24 1.18 EUR / CHF 1.58 1.61 1.55 1.55 EUR / SKK 37.10 34.53 38.55 37.87 EUR / CZK 28.28 27.47 29.79 29.02 EUR / RUR 34.16 34.68 35.07 34.00 EUR / HUF 264.24 251.50 248.60 252.90 EUR / GBP 0.68 0.67 0.68 0.69 Consolidated 54 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Accounting Policies

Intangible assets are capitalized at cost and are amortized by means of scheduled amortization using the straight-line method over the customary useful life of between three and fi ve years.

Intangible assets are amortized as follows based on the purchase price allocation:

Useful life in years

Brand name 15 Trademarks 10 Software 3 – 7 Customer Relationships 10 – 12

The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition.

In addition, each individual asset is assessed to ascertain whether it has a fi nite or indefi nite useful life pursuant to IAS 36 “Impairment of Assets” (revised) and IAS 38 “Intangible Assets” (revised). Intangible assets with indefi nite useful lives are tested for impairment at least once a year as of December 31, either individually or at the cash-generating unit level, as appropriate. The useful life of an intangible asset with an indefi nite life is reviewed annually to determine whether indefi - nite life assessment continues to be justifi able. If not, the change in the useful life assessment from indefi nite to fi nite is made on a prospective basis.

Expenditures for research and development are charged against income in the period in which they are incurred, except for product development costs which satisfy the following criteria:

The product is clearly defi ned and costs directly attributable to development can be measured reliably. The technical feasibility of the product is demonstrated. The product is intended for sale or in-house use. A potential market exists for the product or its usefulness in case of internal use is demonstrated, and adequate technical, fi nancial and other resources required for completion of the project are available.

Capitalized Development Costs During the period of development, the asset is tested for impairment annually. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future sales, generally over fi ve years using the straight-line method. During the period in which the asset is not yet in use it is tested for impairment annually. 55

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Publicly funded development subsidies from the EU for basic research are recorded on the basis of the hours worked. These are recognized as other operating income in the consolidated fi nancial statements.

Property, plant and equipment are measured at cost less systematic depreciation. They are depreciated over their normal useful lives using the straight-line method as follows:

Useful life in years

IT equipment 3 Motor vehicles 5 Factory equipment 3 – 10 Leasehold improvements 5 – 10

Straight-line depreciation is based on the estimated useful lives of the assets.

If property, plant and equipment items are sold or disposed of, their costs and related accumulated depreciation are eliminated from the balance sheet and the resulting gain or loss on sale is recorded in the income statement.

The residual values of the assets, useful lives and depreciation methods are reviewed at the end of each fi scal year and adjusted if necessary.

Property, plant and equipment and intangible assets with fi nite useful lives (including capitalized development costs) are tested for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized in income for items of property, plant and equipment and intangibles carried at cost. The recoverable amount is the higher of an asset’s net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable and willing parties. Value in use is the present value of estimated future cash fl ows expected to arise from continuing use of an asset and from its disposal at the end of its useful life. The recoverable amount is estimated for each individual asset or, if that is not possible, for the cash-generating unit.

A reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. The reversals are posted to the income statement (IAS 36).

Goodwill arising from a business combination is initially measured at cost, which is the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment at least once a year or whenever facts or changes in circumstances indicate that the carrying amount could be impaired. Consolidated 56 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, alloca ted to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefi t from the synergies of the combination. This applies regardless of whether other group assets or liabilities have already been alloca ted to these units or groups of units. Each unit or group of units to which the goodwill has been allocated represents the lowest level in the Group at which goodwill can be monitored for internal management purposes.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognized.

An impairment loss recognized for goodwill cannot be reversed in a subsequent period.

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classifi ed as operating leases. Lease payments under an operating lease are recognized in the income statement as an expense on a straight-line basis over the lease term (IAS 17.25).

Inventories solely comprise merchandise which is carried at cost. Due consideration in the form of appropriate mark- downs is given to inventory risks relating to reduced salability. If net realizable value is lower on the balance sheet date, then the lower value is stated. If the net realizable value increases for inventories that have already been devalued, the resulting reinstatement of original value is recorded as a reduction of the cost of materials.

Borrowing costs are immediately recorded as an expense.

Payments received on account from customers are recorded as liabilities.

Receivables and other assets are shown at the fair value of the consideration and measured at their amortized cost after setting up the required valuation allowances.

Financial assets and fi nancial liabilities carried in the balance sheet include cash and cash equivalents, trade receivables, trade payables and other assets and liabilities, non-current assets, loans, direct loans and fi nancial investments. The recognition and measurement criteria used for these items are shown in the recognition and measurement methods contained in the notes to these consolidated fi nancial statements. 57

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Financial assets as defi ned by IAS 39 are broken down into fi nancial assets at fair value through profi t or loss, loans and receivables, held-to-maturity investments or available-for-sale fi nancial assets. Initial recognition of fi nancial assets is at fair value. In the case of fi nancial investments which are not at fair value through profi t or loss, any directly attributable transaction costs are also included. Nemetschek Aktiengesellschaft decides on classifi cation of its fi nancial assets upon initial recognition and reviews allocation at the end of each fi scal year if permissible and appropriate.

Regular-way purchases and sales of fi nancial assets are recognized as of the trading date, i.e. the date on which the entity entered into the obligation to purchase the asset. A regular-way purchase or sale is a purchase or sale of a fi nancial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

Financial assets at fair value through profi t or loss Financial assets that qualify as held for trading are included in the “fi nancial assets at fair value through profi t or loss” category. Financial assets are classifi ed as held for trading if they are acquired for the purpose of selling in the near future. Derivative fi nancial instruments are also classifi ed as held for trading unless they are designated as a hedging instrument and are effective as such. Gains or losses on investments held for trading are recognized in income.

Held-To-Maturity Investments Held-to-maturity investments are non-derivative fi nancial assets which carry fi xed or determinable payments and fi xed maturities and which the Group has the positive intention and ability to hold to maturity. After initial measurement, held- to-maturity investments are measured at amortized cost. This cost is computed as the amount initially recognized minus principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initially recognized amount and the maturity amount, less allowance for impairment. This calculation includes all fees and points paid or received between the parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Gains and losses are recognized in the income statement when the investments are derecognized or impaired, as well as through the amortization process.

Available-For-Sale Financial Assets Available-for-sale fi nancial assets are non-derivative fi nancial assets that are designated as available for sale or are not classifi ed as one of the categories above. After initial measurement, available-for-sale fi nancial assets are measured at fair value with unrealized gains and losses being recognized directly in equity in the net unrealized gains reserve. When the investment is disposed of, the cumulative gain or loss previously recorded in equity is recognized in the income statement. Interest received or paid on fi nancial assets is disclosed as interest income or interest expenses using the effective interest rate. Dividends earned on investments are recognized in the income statement as ‘Dividend received’ when the right of payment has been established. Consolidated 58 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

It is not currently possible to calculate the fair value reliably when measuring the fi nancial assets, as the planning data available is not suffi cient. These are thus measured at amortized cost.

Fair Value The fair value of investments that are actively traded in organized fi nancial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument, which is substantially the same; discounted cash fl ow analysis or other valuation models.

Available-For-Sale Financial Investments If an available-for-sale asset is impaired, an amount recognized in equity for the difference between its cost (net of any principal repayment and amortization) and current fair value less any impairment loss on that asset previously recognized in profi t or loss is reclassifi ed to the income statement. Reversals in respect of equity instruments classifi ed as available for sale are not recognized in the income statement. Reversals of impairment losses on debt instruments are reversed through the income statement, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognized in the income statement.

Loans and Receivables Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments and that are not quoted in an active market. These assets are measured at amortized cost using the effective interest method. A gain or loss is recognized in the net profi t or loss for the period when the loans and receivables are derecognized or impaired as well as through the amortization process.

Interest-Bearing Loans All loans and borrowings are initially recognized at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the amortization process.

The Group uses derivative fi nancial instruments such as forward exchange contracts in order to hedge against currency risks. These derivative fi nancial instruments are initially recognized at fair value at the time at which the corresponding contract is signed and subsequently revalued at fair value. Derivative fi nancial instruments are recognized as assets if their fair value is positive and as liabilities if their fair value is negative.

For derivative fi nancial instruments that do not satisfy the criteria for hedge accounting, any gains or losses from changes in fair value are immediately recognized in profi t or loss.

The fair value of forward exchange contracts is determined by referring to the current foreign exchange rates for forward contracts with similar terms. 59

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Cash and Cash Equivalents – Cash and Securities Cash and cash equivalents and securities are short-term, highly liquid investments that are readily convertible to cash with original maturities of three months or less. Immaterial fl uctuations in value can result. Securities with a term of longer than three months are not allocated to cash and cash equivalents.

Reserves are created in accordance with statutory requirements and the articles of incorporation and bylaws (note 17).

Share-Based Payments Pursuant to IFRS 2, share-based payments are recognized as an expense for stock options of executives in personnel expenses and in equity (capital reserve). The Company provides a company pension plan for selected members of management. The provisions are measured every year by reputable independent appraisers. Provisions for pensions and similar obligations are determined using the projec ted unit credit method (IAS 19). The projected unit credit method considers each period of service as giving rise to an additional unit of benefi t entitlement and measures each unit separately to build up the fi nal obligation. The obligation is recorded as a provision in the balance sheet. Actuarial gains and losses are recognized immediately in the income statement.

All other provisions take into account all obligations discernable on the balance sheet date that are related to transactions or events that have already taken place but for which the amount or due date is uncertain. Non-current provisions must be discounted at the balance sheet date unless the effects are immaterial.

Contingent liabilities are not recognized in the consolidated fi nancial statements until their utilization is more likely than not. They are disclosed in the notes to the consolidated fi nancial statements unless probability of utilization is remote.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. Calculation is based on the tax rates and tax laws applicable as of the balance sheet date (IAS 12.46, IAS 12.47).

Deferred taxes are recognized using the liability method for all temporary differences between the carrying amounts of assets and liabilities in the balance sheet and the amounts used for income tax purposes as of the balance sheet date. Deferred tax liabilities are recognized for all taxable temporary differences. However the following exceptions apply (IAS 12.15):

No deferred tax liabilities may be recognized from initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profi t nor taxable pro fi t (tax loss).

No deferred tax liabilities may be recognized for taxable temporary differences related to investments in subsidiaries, associates and interests in joint ventures if the entity controls the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future (IAS 12.39). Consolidated 60 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profi t will be available against which the deductible temporary differences and the carryforward of unused tax credits and unused tax losses can be utilized.

The following exceptions apply:

No deferred tax assets may be recognized from deductible temporary differences arising on initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction, affects neither accoun t- ing profi t nor taxable profi t or loss (IAS 12.24).

Deferred tax assets may only be recognized for taxable temporary differences related to investments in subsidiaries, associates and interests in joint ventures to the extent that it is probable that the temporary differences will reverse in the foreseeable future and suffi cient taxable profi t will be available against which the temporary differences can be utilized (IAS 12.44).

The carrying amount of a deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that suffi cient taxable profi t will be available to allow the benefi t of part or all of that deferred tax asset to be utilized. Unrecognized deferred tax assets are reviewed at each balance sheet date and recognized to the extent that it has become probable that future taxable profi t will allow the deferred tax asset to be realized (IAS 12.56).

Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date (IAS 12.47).

Income taxes relating to items posted directly to equity are recognized in equity and not in the income statement (IAS 12.61).

Deferred tax assets and deferred tax liabilities are offset against each other when the Group has an enforceable right to offset the current tax assets against the current tax liabilities and these assets and liabilities relate to income taxes levied by the same taxation authority for the same taxable entity (IAS 12.74).

Sales, expenses and assets are recognized net of VAT (IAS 18.8). 61

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

The following exceptions apply:

Where the VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the VAT is recognized as part of the cost of the asset or as part of the expense item as applicable; and receivables and liabilities are recognized together with the VAT amount included.

VAT which will be reimbursed by the tax offi ce or must be transferred to it is recorded under assets or liabilities in the balance sheet accordingly.

Liabilities are reported at amortized cost.

Deferred income relates to income received before the balance sheet date that relates to following periods.

Minority interests contain a share of fair values of the identifi ed assets and liabilities at the time the subsidiary is acquired. The losses allocable to minority interests in a consolidated subsidiary may exceed the minority interest in the equity of the subsidiary. The excess, and any further losses allocable to the minority, are charged against the majority interest except to the extent that the minority has a binding obligation to, and is able to, make good the losses. If the subsidiary shows profi ts at a later point in time, these are allocated in full to the majority holding unless these exceed the accumulated loss shares assumed by the minority interests (IAS 27.27).

Revenue is recognized when it is probable that the economic benefi ts associated with the transaction will fl ow to the entity and the amount of the revenue can be measured reliably. Revenue is recognized net of sales tax and discounts when delivery has taken place and transfer of risks and rewards has been completed. Revenue from the provision of services is recognized by reference to the percentage of completion when it can be measured reliably. The percentage of completion is determined based on surveys of work performed and is generally based on the hours worked in proportion to the bud- geted total number of hours.

Basic Information on Revenue Recognition

The Nemetschek Group generally distinguishes between the recognition of revenue from the sale of goods and merchandise, from the provision of services and royalties.

Revenue from the sale of goods and merchandise must be recognized (point in time) if and only if all of the following conditions are fulfi lled (IAS 18.14):

The signifi cant risks and rewards of ownership of the goods and products sold have been transferred (transfer of title). The entity does not retain control over the goods sold. The amount of revenue can be measured reliably. It is probable that the economic benefi ts associated with the transaction will fl ow to the entity (receipt of receivable). The costs incurred in respect of the transaction can be measured reliably. Consolidated 62 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Revenue from the provision of services must be recognized if (IAS 18.20):

The amount of revenue can be measured reliably It is probable that the economic benefi ts associated with the transaction will fl ow to the entity (receipt of receivable) The stage of completion of the transaction at the balance sheet date can be measured reliably The costs incurred for the transaction and the costs to complete the transaction can be measured reliably

Contracts for work and services and fi xed price contracts are concluded in certain cases. In such cases, revenue and income is calculated using the percentage of completion method provided that the prerequisites prescribed in IAS 11.23 are met. This involves recognizing the individual revenue components in accordance with the percentage of completion, measured by reference to the percentage of contract costs incurred to date to estimated total contract costs.

This has the following implications for the Nemetschek Group:

a. Software and licenses

aa. Standard software The afore-mentioned criteria for the sale of goods and merchandise are generally applied, i.e. revenue is recognized when the software is sold. License fees and royalties resulting from the use of company assets (software) are recorded in accordance with the economic substance of the agreement. Revenue is recorded on a straight-line basis over the term of the license agreement unless agreed otherwise.

The transfer of user rights in return for fi xed compensation (non-recurring licenses) which give the licensee unrestricted use is a sales transaction from an economic perspective and can be fully recognized as income.

If the infl ow of licenses fees or royalties depends on the occurrence of a certain event in the future, revenue is recognized only if it is probable that the license fee or royalty will fl ow to the entity. The time at which this occurs usually coincides with occurrence of the future event.

ab. Sales transactions via sales representatives / agents From an economic perspective, income is generally recorded when ownership and the related risks and rewards of ownership are transferred. However, if the seller is acting as an agent / representative, income is not recorded until the software / hardware is sold to the fi nal customer. 63

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

b. Hardware

The afore-mentioned criteria for the sale of goods and merchandise generally apply, i.e. revenue is recognized when the hardware is sold (when the goods are delivered). c. Consulting ca. Contract for work and services The afore-mentioned criteria for the sale of services generally apply. If necessary, revenue is recognized using the percentage of completion method (IAS 11) in accordance with the agreed upon consulting stages. The consulting stage does not have to be completed in full. Costs are recorded accordingly. cb. Service contract For pure service contracts, revenue is recognized in the period in which the service is rendered (consulting agreements). d. Maintenance

In general, the afore-mentioned criteria for the sale of services are applied, i.e. revenue from maintenance contracts or services is recognized in the period in which the service is rendered.

If the sale price of software / hardware contains a certain partial amount for subsequent services (e.g. maintenance), this amount is accrued and recorded as income pro rata temporis over the periods in which the services are rendered. The partial amount is initially recognized as a liability. e. Training

In general, the afore-mentioned criteria for the sale of services are applied, i.e. revenue is recognized in the period in which the service is rendered.

Interest income is recognized when the interest has accrued (using the effective interest method, i.e. the rate that discounts the estimated future cash receipts through the expected life of the fi nancial instrument to the net carrying amount of the fi nancial asset).

The segment reporting divides the Group worldwide into the segments Design, Build, Manage and Multimedia. The business segments Design, Build, Manage and Multimedia form the basis for the primary segment reporting. Consolidated 64 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Employees (including executives) at Nemetschek Aktiengesellschaft receive share-based payments whereby the employees receive remuneration in the form of equity instruments. The expenses incurred due to equity-settled share-based transactions are measured at the fair value of the equity instruments granted on the date granted. The fair value is calculated u sing a binominal model (Black-Scholes). Expenses incurred due to equity-settled share-based transactions are recorded over the period in which the service and / or service conditions are fulfi lled with a corresponding increase in equity at the same time. This period ends on the date on which the entitlement of the employee in question becomes vested (‘vesting date’).

Assets held for sale are stated at the lower of the carrying amount and fair value less costs to sell.

Subsequent events that provide additional information about the Group’s position at the balance sheet date have been taken into account in the fi nancial statements as required (events that do require consideration). Subsequent events that do not require consideration are stated in the notes to the consolidated fi nancial statements if they are material (IAS 10.7, 10.20). 65

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Notes to the Consolidated Income Statement

Thousands of € 2006 2005 [1] Sales

Software and licenses 56,322 50,310 Maintenance (software service agreements) 40,928 38,483 Services (consulting and training) 8,898 8,519 Hardware 1,333 1,464 107,481 98,776

Revenue includes kEUR 217 (prior year: kEUR 1,076) due to the use of the percentage of completion method. This revenue is offset by expenses of kEUR 186 (prior year: kEUR 464). Profi t from projects of kEUR 31 (prior year: kEUR 612) is reported in the fi scal year due to the use of the percentage of completion method. The contract costs include the costs directly and indirectly allocable to the contract which can be billed to the customer in keeping with the contract. The degree of completion is calculated on the basis of the costs already incurred in relation to the expected total costs. Revenue is recognized accordingly.

The breakdown of revenue by segment is shown under segment reporting (note 25).

Pursuant to IAS 38, development costs must be capitalized unless they are incurred for basic research or are not related to [2] Own work capitalized projects, provided that the prerequisites of IAS 38.45 are fulfi lled. See also the accounting policies.

The Company was involved in non-project-related product development in 2006. The development costs of projects that have not satisfi ed the criteria of IAS 38.45 have been recorded as an expense. If the development activities were related to usable products the expenses incurred were capitalized. These included direct personnel costs plus directly allocable overheads. Development costs relating to internally generated software amounting to kEUR 142 (prior year: kEUR 0) were capitalized in the fi scal year.

The economic life of capitalized development costs is assumed to be fi ve years. Amortization starts upon commercial exploitation of the development results in the year the costs were incurred using the straight-line method. In 2006, kEUR 19,747 was spent on research and development (prior year: kEUR 18,040).

[3] Other operating Thousands of € 2006 2005 income Income from subletting property 662 719 Offsetting other services 519 180 Development subsidies for EU projects 90 159 Income from the sale of assets 69 98 Foreign exchange rate gains 59 31 Advertising expense advances 15 112 Other 477 256 1,891 1,555

Other operating income includes kEUR 152 from the deconsolidation of acadGraph CAD Studio GmbH, Munich. Consolidated 66 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

[4] Cost of materials / Thousands of € 2006 2005 cost of purchased services Cost of purchased merchandise 6,576 7,356 Cost of purchased services 1,096 1,307 7,672 8,663

[5] Personnel expenses Thousands of € 2006 2005

Wages and salaries 39,698 37,206 Social security, pension costs and welfare 7,225 6,865 46,923 44,071

Social security and other pension costs contain pension obligations of kEUR 7 (prior year: kEUR 170) and the customary local expenses of the state pension insurance for employees. In addition, numerous additional insurance policies have been taken out in favor of employees to top up the state pension scheme. These are funded by the employees themselves.

The annual average* number of employees (headcount) breaks down as follows:

2006 2005

Sales / marketing / hotline 457 383 Development 327 265 Administration 96 88 880 736 Headcount as of December 31 ** 1,151 735

* excl. Graphisoft SE employees ** incl. Graphisoft SE employees

[6] Depreciation and Thousands of € 2006 2005 amortization Amortization of intangible assets 1,132 1,760 Depreciation of property, plant and equipment 1,247 1,419 Depreciation / amortization 2,379 3,179 Amortization of purchase price allocated to intangible assets 503 0 Total depreciation and amortization 2,882 3,179 67

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

[7] Other operating Thousands of € 2006 2005 expenses Commission 6,897 5,948 Rent / leases 5,833 5,391 Advertising expenses 4,444 4,583 Expenses for third-party services 4,065 4,881 Legal and consulting costs 3,126 1,928 Travel expenses 2,235 2,138 Vehicle costs 1,599 1,338 Communication 1,039 1,385 Other 5,035 3,773 34,273 31,365

The item ‘other’ consists of various items all of which are less than kEUR 500. The income from exchange rate differences of under kEUR 118 (prior year: less than kEUR 100) is contained in the item ‘other’. This item is shown net of specifi c valuation allowances of kEUR 247 (prior year: kEUR 150) that are no longer needed.

The result from associates contains write-ups of associates of kEUR 211 (prior year: kEUR 223). [8] Income from associates

[9] Interest Income / Thousands of € 2006 2005 Expenses Other interest and similar income 689 865 Interest and similar expenses – 133 –117 556 748

[10] Income Taxes Thousands of € 2006 2005

Current income tax 4,158 3,408 Effect of taxes, prior years 5 – 1,173 Deferred taxes 18 – 359 4,181 1,876 Consolidated 68 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

The income tax rates of the individual entities range from 16.0 % to 40.5 % (prior year: from 19.0 % to 40.5 %). Deferred taxes were measured on the basis of the nominal tax rates of Nemetschek Aktiengesellschaft or the tax rate applying to the respective subsidiary. The tax rate for Nemetschek Aktiengesellschaft is 40.5 % (prior year: 40.5 %) which is calculated as follows:

in % 2006 2005

Earnings before taxes 100.0 100.0 19.2 % trade tax (weighted) 19.2 19.2 19.2 19.2 80.8 80.8 25 % corporate income tax 20.2 20.2 20.2 20.2 5.5 % solidarity surcharge 1.1 1.1 1.1 1.1

59.5 40.5 59.5 40.5

Thousands of € 2006 2005

Earnings before taxes 18,531 14,024 Theoretical tax rate 40.5 % 7,505 5,680 Differences to German and foreign tax rates – 1,447 – 1,068 Tax effects on: At equity consolidation of associates –28 –114 Use of unrecognized deferred taxes on unused tax losses – 2,336 – 1,676 Effect of taxes, prior years 5 – 1,173 Non-deductible expenses 499 68 Other –17 159

Effective tax expense 4,181 1,876

Effective tax rate (as a %) 22.6 % 13.4 % 69

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Deferred income tax at the balance sheet date relates to the following:

Thousands of € Consolidated balance sheet Consolidated income statement 2006 2005 2006 2005

Deferred tax assets Unused tax losses 1,061 1,127 – 152 0 Elimination of intercompany profi ts spin-off 642 0 642 0 Software development costs 515 0 0 0 Measurement of receivables 433 0 –13 0 Deferred revenue 198 123 –30 51 Potential losses from rent 141 264 – 123 264 Warranty provision 104 95 8 95 Vacation provision 96 93 13 39 IFRS pensions 77 80 –2 54 Elimination of intercompany profi ts on non-current assets 47 67 –20 67 Prepaid rent 41 49 3 20 Construction contract 6 0 –17 0 Measurement of liabilities 30 0 0 0 Provision for archiving costs 20 20 0 20 Other 32 0 20 0 Revaluation of foreign currency contracts 0 16 –16 16 Offsetting –89 –99 0 0

Total deferred tax assets 3,354 1,835

Deferred tax liabilities Measurement difference from purchase price allocation Non-current assets of Graphisoft 10,000 0 0 0 Non-current assets of SCIA 1,139 0 166 0 Measurement difference for goodwill 851 851 0 0 Warranty provision 442 364 –77 –364 Measurement of liabilities 412 0 – 405 0 Non-current assets 89 99 10 0 Recognition of internally developed software 56 0 –56 0 Construction contract 30 0 –29 0 Measurement of receivables 23 0 0 0 Other 3 0 –2 0 Measurement difference for internally developed software 0 0 0 97 Share issue costs 0 0 62 0 Offsetting –89 – 99 0 0

Total deferred tax liabilities 12,956 1,215

Deferred tax expense / income –18 359 Consolidated 70 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

The deferred tax assets on unused tax losses are determined as follows:

Thousands of € 2006 2005

Losses according to entities 31,057 31,090 Deferred tax assets, gross 10,812 11,379 Unrecognized deferred tax assets on unused tax losses – 9,751 – 10,252 Deferred tax assets on unused tax losses, net 1,061 1,127

The items contain deferred taxes on unused tax losses which are likely to be realized in future. The deferred tax assets on unused tax losses were recognized on the basis of the income and expense planning of Nemetschek Aktiengesellschaft (parent) and subsidiaries for the fi scal year 2007. The Company’s detailed planning relates to a one-year period. The Management has stated that the capitalization of deferred taxes on unused tax losses for a longer period cannot be substantiated.

Other non-capitalized deferred tax assets stem from the following items:

Thousands of € 2006 2006 2005 2005 Measurement Deferred taxes Measurement Deferred taxes

Supplementary balance sheet 0 0 665 269 Elimination of intercompany profi ts from spin off 0 0 3,954 1,598 Available-for-sale fi nancial assets 385 156 385 156 Non-capitalized deferred taxes, other items 385 156 5,004 2,023

Deferred taxes were not recognized on the above items as it is not certain whether or not they would be recognized by the tax authorities.

[11] Minority Interests Thousands of € 2006 2005

Profi t shares allocable to minority interests 758 480

The profi t shares allocable to minority interests are disclosed separately in the income statement. 71

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Notes to the Consolidated Balance Sheet

A statement of changes in non-current assets is presented on the last page of these notes to the consolidated fi nancial [12] Non-Current Assets statements.

[13] Trade Receivables Thousands of € 2006 2005

Trade receivables (before bad debt allowances) 27,502 17,086 Specifi c bad debt allowance – 2,822 –2,651 Trade receivables 24,680 14,435

Provision was made for the bad debt risk by setting up appropriate specifi c bad debt allowances. Trade receivables are non-interest bearing and are generally on 30 to 90 day terms.

The total bad debt allowances amounted to kEUR 542 in the fi scal year (prior year: kEUR 793). Reversals of bad debt allowances amounted to kEUR 789 (prior year: kEUR 163).

[14] Tax Reimbursement Thousands of € 2006 2005 Rights, Other Assets, Current loan receivables 14,618 109 Assets Held for Sale Prepaid expenses 2,334 2,192 and Prepaid Expenses Income tax refund claims 2,139 1,917 Assets held for sale 560 2,075 Other current assets 2,557 476 Current assets, total 22,208 6,769

Non-current portion of the purchase receivable acadGraph CAD Studio GmbH 765 0 Employer‘s pension liability insurance policy 255 230 Other non-current loans receivable 209 0 Non-current tax claims on income taxes 167 0 Other non-current assets 232 0 Total non-current assets 1,628 230 23,836 6,999

Other current assets contain a loan of kEUR 14,514 extended by Graphisoft SE European Company Limited by Shares, Bu- dapest, Hungary, to Graphisoft Park Ingatlanfejlesztö Kft., Budapest, Hungary. The loan was repaid in full on January 10, 2007.

Other current loans are due for repayment within the next three months. Interest income is earned at the current market rate.

Current assets contain receivables of kEUR 1,552 carried by Graphisoft SE European Company Limited by Shares, Budapest, Hungary, from a Hungarian brokerage house that originate from the exercise of a stock option. Consolidated 72 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

The assets held for sale relate to real estate of Nemetschek CREM Solutions GmbH & Co KG of kEUR 560 (Manage division) which is to be sold in the near future. The fall is a result of selling assets of acadGraph CAD Studio GmbH, Munich.

[15] Equity The development of the capital reserve, the revenue reserve and the retained earnings / accumulated loss of the Group is presented in the statement of changes in shareholders’ equity.

[16] Subscribed Capital The capital stock of Nemetschek Aktiengesellschaft is unchanged since the prior year and amounts to EUR 9,625,000.00 as of December 31, 2006. Since January 1, 2004, the number of no-par shares with a face value of EUR 1 has remained unchanged at 9,625,000.

According to the resolution of the shareholders’ meeting on July 29, 2003, the management board is authorized until July 28, 2008, to:

Increase the capital stock, once or several times, by a maximum of EUR 1,200,000.00 subject to the consent of the supervisory board, by issuing new no-par value bearer shares in exchange for cash contributions (Authorized Capital I).

Increase the capital stock, once or several times, by a maximum of EUR 3,600,000.00 subject to the consent of the supervisory board, by issuing new no-par value bearer shares in exchange for cash contributions or contributions in kind (Authorized Capital II).

The shareholders’ meeting of July 29, 2003, passed a resolution for a contingent increase of the capital stock of the Company by up to EUR 850,000.00 which serves to guarantee subscription rights (options) to management board members and executives.

[17] Capital Reserve / We refer to the consolidated statement of changes in shareholders’ equity. A fi gure of kEUR 194 was added to the capital Revenue Reserves reserves to cover the expense of share-based payments, see note [28]. The dividend of kEUR 6,256 in total was paid out on May 23, 2006 (basic dividend of EUR 0.65). The change of kEUR 92 in issuance costs on the prior year relate to an input tax claim from the tax offi ce for the costs of the IPO.

[18] Provisions and The obligation to a subsidiary’s managing directors resulting from pension plans is determined using the projected unit Accruals credit method. Actuarial gains and losses are recognized immediately in the income statement. There were no curtailments in the year ending December 31, 2006. The plans were continued beyond this period. The pension plans provide a benefi t after reaching the age of 65 amounting to 60 % of the last net salary, up to a maximum amount of EUR 3,834 (DEM 7,500). All claims are vested.

The table below reconciles the obligations with the amounts recognized in the balance sheet:

Thousands of € January 1 Utilization Reversal Allocations December 31

Pension provisions 2006 583 0 0 7 590 Pension provisions 2005 413 0 0 170 583 73

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Thousands of € 2006 2005

Present value of the obligation 590 583

The expenses relate to:

Thousands of € 2006 2005

Current service cost 32 56 Interest cost 25 22 Actuarial gains (prior year: losses) –50 92 Net benefi t expense 7 170

The net benefi t expense from current service cost and interest amounts to kEUR 7 (prior year: kEUR 170) and is disclosed exclusively under personnel expenses. The ‘mortality tables 2005 G’ from Dr. Klaus Heubeck were applied analogously to the prior year. Principal actuarial assumptions used to determine pension obligations as of December 31 were as follows:

in % 2006 2005

Discount rate 4.50 4.25 Future salary increases 0.00 0.00 Future pension increases 1.00 1.00

The amounts for the current and previous four periods are as follows:

Thousands of € 2006 2005 2004 2003 2002

Defi ned benefi t obligation 590 583 443 355 322 Employer‘s pension liability insurance 255 230 205 0 0 Defi cit 335 353 238 355 322 Experience adjustments of plan liabilities – = loss / + = gain 49 – 92 – 47 18 11 Experience adjustments of plan assets – = loss / + = gain –9 –9 0 –6 –6 Consolidated 74 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Accruals contain the following items:

Thousands of € 2006 2005

Commission / bonuses for employees 4,483 3,502 Outstanding invoices 3,269 1,297 Vacation accrued by employees 1,755 1,462 Legal and consulting fees / fi nancial statements costs 347 313 Other accruals (individual items below kEUR 100) 874 463 Accruals, total 10,728 7,037

Other provisions include the following items:

Thousands of € January 1 Utilization Reversal Allocations December 31

Potential losses from rent 652 354 0 52 350 Guarantees 591 591 0 511 511 Credit notes on invoices 315 315 0 313 313 Archiving costs 185 0 0 0 185

December 31, 2006 1,743 1,260 0 876 1,359

December 31, 2005 1,547 902 0 1,098 1,743

The potential loss provision for rent was extrapolated on the basis of the current sublease agreements and determined for the remaining terms of the sublease agreements. The provision for credit notes contains an allowance for any credit notes from the sales of the prior year. The warranty provisions have been set up at an amount of at least 0.5 % of sales revenue less purchased merchandise (i.e. sales subject to warranty).

Thousands of € 2006 2005

Accruals 10,728 7,037 Provisions 1,359 1,743 Total provisions and accruals 12,087 8,780

While the provisions for warranties and credit notes are current in nature, the provisions for potential losses cover a period of four years and the archiving costs cover a period of ten years. The current provisions are expected to be used within the next 12 months.

As a company with international operations working in various divisions, the Group is exposed to a whole range of legal risks. This is especially true of risks for warranties, tax law and other legal disputes. The outcome of currently pending and / or future litigation cannot be predicted with certainty, so that expenses may be incurred from decisions that are not fully covered by insurance and that may have signifi cant effects on the business and its results. Management is of the opinion that litigation currently pending is not likely to result in decisions that will signifi cantly and negatively infl uence the net assets and results of operations of the Group. 75

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Liabilities, categorized by due date, comprise the following: [19] Liabilities

2006 Thousands of € Total amount Less than 1 year 1 to 5 years More than 5 years

Liabilities to banks 1,039 797 242 0 Payments received on account of orders 310 310 0 0 Trade payables 5,986 5,986 0 0 Tax payables 3,692 3,692 0 0 Liabilities from assets held for sale 0 0 0 0 Other liabilities 102,044 101,408 636 0 thereof taxes 3,697 3,697 0 0 thereof relating to social security 1,001 1,001 0 0

December 31, 2006 113,071 112,193 878 0

2005 Thousands of € Total amount Less than 1 year 1 to 5 years More than 5 years

Liabilities to banks 702 702 0 0 Payments received on account of orders 64 64 0 0 Trade payables 3,615 3,615 0 0 Tax payables 1,118 1,118 0 0 Liabilities from assets held for sale 763 763 0 0 Other liabilities 9,181 9,181 0 0 thereof taxes 2,005 2,005 0 0 thereof relating to social security 926 926 0 0

December 31, 2005 15,443 15,443 0 0 Consolidated 76 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Trade payables are subject to the customary retention of title relating to the supply of movable assets and inventories.

Terms and conditions of the above fi nancial liabilities: Trade payables are non-interest bearing and are normally settled on 60-day terms Other liabilities are non-interest bearing and have an average term of 60 days

Other liabilities primarily contain the liabilities to the shareholders of Graphisoft SE European Company Limited by Shares, Budapest, Hungary, for the acquisition of 5,774,924 shares (EUR 9 per share) totaling kEUR 51,974 and the liabilities to the minority shareholders of kEUR 33,587.

As of December 31, 2006, the Group has a registered land charge for kEUR 1,022 in favor of Credit- und Volksbank e.G. Wuppertal to secure a liability of Nemetschek CREM Solutions GmbH & Co. KG. There were no further liabilities secured by encumbrances or collateral assignment as of December 31, 2006.

Liabilities to banks break down as follows:

Nemetschek CREM Solutions GmbH & Co. KG, Ratingen There is a short-term loan of kEUR 654 with a variable interest rate of 2.5 % above the three-month Euribor. The loan was renewed in the course of the year and still has a term of one year.

SCIA Group NV, Herk-de-Stad, Belgium Loans total kEUR 222 and break down as follows:

Thousands of € Current Non-current Interest Matures on portion portion in %

Loan 1 35 71 4.10 Nov. 20, 2009 Loan 2 14 54 4.71 June 21, 2010 Loan 3 6 6 4.08 March 2, 2009 Loan 4 12 24 4.69 Nov. 4, 2009

December 31, 2006 67 155

Graphisoft SE European Company Limited by Shares, Budapest, Hungary The special purpose loan for development services totals kEUR 153 as of December 31, 2006, and breaks down as follows:

Thousands of € Current Non-current Interest Matures on portion portion in %

EURIBOR less 3 % kEUR 38 annually Loan 76 77 (at least 1 %) over four years 77

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Contingent liabilities

As of balance sheet date, contingent liabilities amount to kEUR 1,371 and mainly relate to rental agreements and bank guarantees. From a tax perspective, there are contingent liabilities of kEUR 792 which could lead to payments over the next fi ve years.

Deferred income amounts to kEUR 10,322 (prior year: kEUR 6,807). The total amount will lead to revenues in the fi rst half [20] Deferred Income of 2007.

Basic earnings per share do not take into account any options, and are calculated by dividing the net income for the period [21] Earnings per share attributable to shares by the average number of shares during the period.

For the purpose of calculating diluted earnings per share, the net income attributable to ordinary shareholders and the weighted average number of shares outstanding are adjusted for the effects of all potentially diluting ordinary shares from conversion of share options. The number of ordinary shares is the weighted average number of ordinary shares plus the weighted average number of ordinary shares which would be issued on the conversion of all the potentially diluting ordinary shares into ordinary shares. Share options are deemed to have been converted into ordinary shares on the date on which the options were granted. When calculating diluted earnings per share, the weighted average number of ordinary shares which would be issued due to the conversion of all potentially diluting ordinary shares was not considered in any periods in which a net loss for the year was disclosed. As of December 31, 2006, the number of dilutive ordinary shares included in the calculation of diluted loss per share amounts to 25,000 (prior year: 0). A dilutive effect was taken into account for the options, as the average share price for the ordinary shares matched the strike price of the options during the last quarter.

2006 2005

Net result in kEUR 13,592 11,668 Average number of ordinary shares outstanding as of December 31 9,625,000 9,621,439 Average number of ordinary shares to be included in the calculation of diluted EPS as of December 31 9,650,000 9,621,439 Earnings per share in EUR, basic 1.41 1.21 Earnings per share in EUR, diluted 1.41 1.21

25,000 stock options were considered when calculating the diluted earnings per share. Consolidated 78 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

[22] Financial Obligations Thousands of € Total Less than 1 year 1 to 5 years Over 5 years

Rental agreements 29,907 7,060 22,309 538 Leases 1,608 644 893 71 Total fi nancial obligations as of December 31, 2006 31,515 7,704 23,202 609

Rental agreements 15,690 4,094 11,279 317 Leases 1,073 504 541 28 Total fi nancial obligations as of December 31, 2005 16,763 4,598 11,820 345

The rent agreements consist almost exclusively of rent agreements for offi ce space with limited terms. The lease liabilities mainly consist of leases for vehicles and telecommunications equipment. Rent obligations are offset against expected income from non-cancelable subleases for the years 2007 through 2010 totaling kEUR 1,223 (prior year: kEUR 1,641).

[23] Notes to the Cash The cash fl ow statement is split into cash fl ows from operating, investing and fi nancing activities. The cash fl ow from Flow Statement operating activities amounts to kEUR 18,051 (prior year: kEUR 12,134).

The cash fl ow from investing activities of kEUR – 6,338 (prior year: kEUR – 2,043) is characterized by replacement investments for property, plant and equipment and software of group entities of kEUR 2,050 (prior year: kEUR 2,141). A cash outfl ow of kEUR 5,295 was recorded in the fi scal year for the purchase price installment for the acquisition of the remaining 25 % of ING. AUER – Die Bausoftware GmbH, Mondsee, Austria. Cash infl ows of kEUR 1,390 were received in the fi scal year related to the acquisition of subsidiaries (SCIA International NV: kEUR – 3,341, DACODA GmbH: kEUR 43, Graphisoft SE: kEUR 4,688).

The cash fl ow from fi nancing activities primarily includes the distribution of the dividend in May 2006 of kEUR – 6,256 (prior year: kEUR – 19,250), the payment of profi t shares to minority interests amounting to kEUR – 397 (prior year: kEUR – 874) and changes in liabilities to banks in the course of the acquisitions of kEUR 1,000.

The Group‘s cash and cash equivalents comprise cash and highly liquid securities and break down as follows:

Thousands of € 2006 2005

Bank balances 30,180 28,966 Securities qualifying as cash equivalents 2,478 0 Fixed term deposits 1,853 0 Cash and cash equivalents 34,511 28,966 79

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Bank balances bear interest at the fl oating rates applying to on-call deposits. Fixed-term deposits and short-term securities are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group. These could be subject to slight fl uctuations in value. Fixed-term deposits bear interest at the respective rates applying for the term. In addition to short-term investments qualifying as cash equivalents (kEUR 2,478), securities of kEUR 3,820 include investments (kEUR 1,342) maturing within three and six months. The fair value of cash and cash equivalents including these securities amounts to kEUR 34,511 (prior year: kEUR 28,966).

In the course of ordinary operations, the Nemetschek Group is exposed to exchange rate fl uctuations in particular. It is [24] Financial Instruments company policy to exclude or limit these risks by entering into hedge transactions. All hedging activities are coordinated or performed centrally by the group treasury.

Due to its international business operations, the Nemetschek Group is exposed to exchange rate fl uctuations on the international money and capital markets. Group-wide foreign currency policy is governed by instructions which are guided by the minimum requirements for bank trading issued by the German Federal Financial Supervisory Agency (BaFin). Only fi rst- class national banks whose credit rating is checked regularly by rating agencies may act as partners for hedging transactions.

The aim of the Company with regard to fi nancial risk management is to mitigate the risks presented below by the methods described.

Foreign exchange risk management As required, the Group enters into various types of foreign exchange contracts to manage its foreign exchange risk resul t- ing from cash fl ows from (anticipated) business activities and fi nancing arrangements denominated in foreign currencies. Transaction risks are calculated in each foreign currency and include assets and liabilities denominated in foreign currency and certain off-balance sheet items such as fi xed and probable purchase and sales commitments. The currency risks of the Group occur due to the fact that the Group operates and has production and sales centers in different countries worldwide.

In 2006 the Group concluded two forward exchange contracts in US dollars that were still pending as of the balance sheet date. The fair value of these transactions is over the historical rate due to the exchange rate of the US dollar as of December 31, 2006.

Forward contract to hedge expected distributions Maturity EUR / USD Profi t Thousands of € exchange rate 2006

Sale of USD

USD 500,000 May 10, 2007 1.303 10

USD 300,000 May 10, 2007 1.324 10 Consolidated 80 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Liquidity risks The Group needs suffi cient liquidity to meet its fi nancial obligations. Liquidity risks arise from the possibility that custo mers may not be able to settle obligations to the Nemetschek Group under normal trading conditions. The credit rating of the Group allows suffi cient cash to be procured. Moreover, the Group has lines of credit that have not yet been used.

To manage this risk the Company periodically assesses the credit rating of its customers. Liquidity risks can also arise from the possibility that a market for derivatives may not exist in some circumstances.

Contingency risks Credit risks, or the risk of contractual parties defaulting, are managed by means of credit approvals, limits and monitoring procedures. Where appropriate, the Company obtains additional collateral in the form of rights to securities or arranges master netting agreements.

The Company does not expect that any of its business partners with high credit ratings will fail to meet their obligations. The Nemetschek Group has no signifi cant concentration of credit risks with any single customer or customer group. The maximum credit risk can be calculated from the amounts shown in the balance sheet.

Credit risks The Group trades only with recognized, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verifi cation procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not signifi cant. For transactions that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval of the Head of Credit Control.

With respect to credit risk arising from the other fi nancial assets of the Group, which comprise cash and cash equivalents, available-for-sale fi nancial investments and certain derivative instruments, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

Fair value of fi nancial instruments Fair value is defi ned as the amount at which the instrument could be exchanged in a current transaction between know ledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation. Fair values are obtained from market prices, discounted cash fl ow analyses or option pricing models as appropriate. 81

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

The following methods and assumptions are used to estimate the fair value of each class of fi nancial instrument:

Financial assets and current fi nancial liabilities The carrying amount of cash, other fi nancial assets and current fi nancial liabilities approximates fair value due to the re latively short-term maturity of these fi nancial instruments. Where no market prices are available, the fair value of publicly traded instruments is estimated based on market prices for those or similar investments. For all other instruments for which there are no market prices, a reasonable estimate of fair value has been calculated based on the expected cash fl ow or the underlying net asset base for each investment. All carrying amounts approximate the fair value of the corresponding items.

Derivative fi nancial instruments Depending on their maturity, the derivatives used as hedges with positive (negative) fair values are either classifi ed as other current assets (provisions) or as other non-current assets (provisions). Derivative fi nancial instruments not used as hedging instruments are classifi ed as fi nancial assets held for trading and measured at fair value; changes in fair value are included in the result for the period.

The Company divides its activities into the segments Design, Build, Manage and Multimedia. The Design segment contains [25] Segment Reporting the architecture and engineering division and is mainly characterized by the development and marketing of CAD, static engineering and tender software. The Build segment involves the creation and marketing of commercial software for construction companies. The Manage segment covers facility management, which involves extensive administration and ma nagement of construction projects. Also, the Group’s Multimedia segment is involved in the fi eld of multimedia software for visualization and animation applications. Consolidated 82 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Balance sheet disclosures:

2006 Thousands of € Total Design Build Manage Multimedia

Trade receivables 24,679 20,703 2,276 1,024 676 Inventories 814 608 37 0 169 Other assets / prepaid expenses 21,138 19,549 292 694 603 Assets held for sale 560 0 0 560 0 Non-current assets 115,111 97,263 12,469 2,084 3,295 thereof additions to non-current assets 2,050 1,503 360 35 152

Segment assets 162,302 138,123 15,074 4,362 4,743

Cash and cash equivalents 35,853 Financial assets, associates 484 Non-allocated income tax receivables and deferred tax assets 5,493

Total assets 204,132

Liabilities 108,341 107,214 640 224 263 Provisions and accruals (incl. pension provisions) 12,677 10,159 526 733 1,259 Deferred revenue 10,322 10,054 107 139 22

Segment liabilities 131,340 127,427 1,273 1,096 1,544

Non-allocated liabilities * 17,686

Total liabilities 149,026

* The liabilities that were not allocated relate to loans, income taxes and deferred taxes. 83

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

2005 Thousands of € Total Design Build Manage Multimedia

Trade receivables 14,435 10,842 1,912 732 949 Inventories 481 291 47 0 143 Other assets / prepaid expenses 5,230 4,082 234 640 274 Non-current assets 27,711 10,432 11,818 2,110 3,351 thereof additions to non-current assets 2,141 1,656 266 26 193

Segment assets 47,857 25,647 14,011 3,482 4,717

Cash and cash equivalents 28,966 Financial assets, associates 387 Non-allocated income tax receivables and deferred tax assets 3,752

Total assets 80,962

Liabilities 8,328 6,863 584 629 252 Provisions and accruals (incl. pension provisions) 9,363 7,061 817 614 871 Deferred revenue 6,807 6,643 115 49 0

Segment liabilities 24,498 20,567 1,516 1,292 1,123

Non-allocated liabilities * 8,330

Total liabilities 32,828

* The liabilities that were not allocated relate to loans, income taxes and deferred taxes. Consolidated 84 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Income statement disclosures:

2006 Thousands of € Total Elimination Design Build Manage Multimedia

Revenue, external 107,481 0 80,828 12,126 6,263 8,264 Intersegment revenues 0 – 1,162 332 61 290 479 Total revenue 107,481 – 1,162 81,160 12,187 6,553 8,743 Depreciation / amortization 2,882 0 2,469 152 61 200 EBIT 17,764 0 12,446 3,536 18 1,764

Interest income 689 Interest expenses – 133 Income from associates 211 Income taxes – 4,181 Net profi t for the year 14,350

2005 Thousands of € Total Elimination Design Build Manage Multimedia

Revenue, external 98,776 0 74,142 12,644 5,535 6,455 Intersegment revenues 0 –971 157 79 336 399 Total revenue 98,776 –971 74,299 12,723 5,871 6,854 Depreciation / amortization 3,179 0 2,608 165 108 298 EBIT 13,053 0 9,357 4,068 – 1,384 1,012

Interest income 865 Interest expenses –117 Income from associates 223 Income taxes – 1,876 Net profi t for the year 12,148

The depreciation and amortization of the Design segment includes amortization of kEUR 503 relating to the allocation of the purchase price. Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment revenue, segment expense and the segment result include transfers between business segments. Those transfers are eliminated in consolidation.

Segment reporting by geographic region is as follows:

Thousands of € Revenues Non-current Additions to Sales revenue Non-current Additions to 2006 assets non-current 2005 assets non-current assets assets

Germany 45,693 15,455 1,066 46,370 13,115 1,099 Abroad 61,788 100,140 984 52,406 14,983 1,043 Total 107,481 115,595 2,050 98,776 28,098 2,142

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

The Group’s geographical segments are based on the location of the Group’s assets. Sales to external customers disclosed in the geographical segments are allocated to the various territories on the basis of the customer‘s location.

As of December 31, 2006, Nemetschek Aktiengesellschaft acquired 54.3 % of the shares in Graphisoft SE European Compa- [26] Subsequent events ny Limited by Shares, Budapest, Hungary, a competitor listed on the Hungarian stock exchange from a total of 18 shareholders, including the founder. Including treasury shares, Nemetschek Aktiengesellschaft holds 56.21 % of Graphisoft SE. According to the regulations of the Hungarian stock exchange, a formal takeover bid must be made to the holders of shares in free fl oat. This bid is fi nanced by a loan which simultaneously serves to provide the funds for the takeover from the former shareholders. A formal takeover bid of 2,273 Forint (correspond to EUR 9) per share was made to the minority shareholders of Graphisoft SE. The associated formal documentation for the takeover bid was submitted to the Hungarian fi nancial supervisory authorities as of January 17, 2007, who approved the bid on February 1, 2007. The minority shareholders may accept the bid in the period from February 4, 2007, to March 21, 2007.

Nemetschek Aktiengesellschaft will hold Graphisoft SE as a strategic investment. Graphisoft SE will be continued as an independent entity and retain its own identity.

Graphisoft SE European Company Limited by Shares, Budapest, Hungary, extended a loan of kEUR 14,514 to Graphisoft Park Ingatlanfejlesztö Kft., Budapest, Hungary, in fi scal year 2006. The loan was repaid in full on January 10, 2007.

On February 12, 2007 a general agreement was worked out to spin off the constructor unit of Graphisoft SE European Company Limited by Shares, Budapest, Hungary. Correspondingly, Graphisoft SE will acquire a minority interest in the new company formed by the spin-off.

The Group enters into transactions with its associates and related parties. These transactions are part of ordinary activi- [27] Related Parties ties and are treated at arm‘s length. The most signifi cant transactions include the purchase of licenses for kEUR 125 (prior year: kEUR 54), the sublease of space for kEUR 82 (prior year: kEUR 50) as well as research and development work of kEUR 190 (prior year: kEUR 0).

The balance sheet includes the following outstanding amounts resulting from transactions with associates and related parties:

Thousands of € 2006 2005

Trade receivables and other assets 9 148 Consolidated 86 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Disclosures on Transactions Pursuant to Sec. 15a WpHG [‘Wertpapierhandelsgesetz’: German Securities Trading Act] The management and supervisory boards informed us of the following purchases or sales of shares in the Company pursuant to Sec. 15a WpHG (‘directors’ dealings’) by themselves or by related parties:

Date Number of shares in kEUR

Dr. Peter Mossack June 1, 2006 1,0001) 20 Gerhard Weiß September 28, 2006 7,3951) 160 Gerhard Weiß September 29, 2006 3,6691) 79 Gerhard Weiß October 2, 2006 1,4251) 31 Prof. Georg Nemetschek November 16, 2006 93,7252) 1,341

1) Sale 2) Over-the-counter Buy

Management Board The members of the management board of Nemetschek Aktiengesellschaft receive annual remuneration with a fi xed and variable component including components with long-term incentives.

Thousands of € Fixed salary * Profi t-based Share-based Total 2006 remuneration compensation

Gerhard Weiß 219 505 0 724 Michael Westfahl 168 163 97 428 Dr. Peter Mossack 168 163 97 428 Total management board remuneration in 2006 555 831 194 1,580

Thousands of € Fixed salary * Profi t-based Share-based Total 2005 remuneration compensation

Gerhard Weiß 145 105 0 250 Michael Westfahl 168 107 40.5 316 Dr. Peter Mossack 165 107 40.5 312 Total management board remuneration in 2005 478 319 81 878

* The fi xed component contains the basic salary and other taxable salary components such as health and nursing insurance as well as provisions on company cars. 87

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Supervisory Board

Thousands of € Fixed salary * Profi t-based Total 2006 remuneration

Kurt Dobisch 30.0 15.0 45.0 Prof. Georg Nemetschek 22.5 15.0 37.5 Rüdiger Herzog 15.0 15.0 30.0 Total supervisory board remuneration 67.5 45.0 112.5

Thousands of € Fixed salary * Profi t-based Total 2005 remuneration

Kurt Dobisch 30.0 15.5 45.5 Prof. Georg Nemetschek 22.5 15.5 38.0 Rüdiger Herzog 15.0 15.5 30.5 Total supervisory board remuneration 67.5 46.5 114.0

The Group has a stock option plan for the Company’s management board members, for managing directors of affi liated [28] Share-Based entities and for key employees and executives in the Company and in affi liated entities (stock option holders). Payments

The price for the purchase of the shares when exercising the options (‘strike price’) corresponds to the arithmetic average of the closing rates of the Nemetschek share on the Frankfurt Stock Exchange in the last fi ve trading days prior to the resolution by the management board or – in the case of options for management board members of the company – by the supervisory board to grant the options. However, the strike price cannot fall below the pro rata share in capital stock of each no-par value share (Sec. 9 (1) AktG [‘Aktiengesetz’: German Stock Corporation Act]).

Up to 50 % of the options can be exercised two years after issue at the earliest, up to 75 % three years after issue at the earliest, and up to 100 % four years after issue at the earliest. The overall life of the options is fi ve years. There is no framework in place for the cash settlement of options.

The options can only be exercised if the price of the Nemetschek share – adjusted by any interim dividend payments, options and other special rights – on the date the option is exercised (two years after the issue of the respective tranche at the earliest) is at least 150 % of the price of the Nemetschek share on the date on which the respective tranche was gran ted. If three years have passed since the tranche was granted, the share price must be at least 175 % of this fi gure.

A further condition is that the option holder has fulfi lled the personal and company targets agreed in the year of issue, unless the management board (or the supervisory board in the case of targets for the management board) confi rms that failure to meet the target has no effect or only a limited effect on the exercise of the options.

100,000 options were granted to management board members in fi scal year 2005. This was the fi rst time stock options were granted. The weighted average strike price was EUR 14.60. To date, no options have been forfeited, exercised and / or have lapsed. Consolidated 88 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

The following parameters were used in the calculation:

Volatility 50.0 % Risk-free interest rate 3.1 % Term for 50 % 2 years Term for 25 % 3 years Term for 25 % 4 years Discount for meeting targets 25 %

The volatility stems from the average fi gure for the past three years and is forecast for the future on this basis.

The options are valued using the Black-Scholes formula. The expense is recognized over the expected vesting period from 2005 to 2009. The options granted result in a total expense of kEUR 675, of which kEUR 194 is included as personnel expenses for fi scal year 2006 (prior year: kEUR 81).

[29] Auditors’ Fees Thousands of € 2006

Statutory fi nancial statements 50 Consolidated fi nancial statements 207 Total 257

An amount of kEUR 1 was paid for tax advice. No other remuneration was paid to the auditors.

[30] Date of Publication The consolidated fi nancial statements will be released for publication on March 13, 2007 (date of management authori- zation for issue to the supervisory board).

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Supervisory Board Management Board [31] Disclosures for Members of the Kurt Dobitsch Gerhard Weiß Supervisory Board (self-employed businessman) (Degree in business management) and the Management Chairman until January 31, 2007 Board of the Member of the following supervisory boards: Chairman Company United Internet AG (Chairman) Member of the following supervisory boards: Bechtle AG NEMETSCHEK NORTH AMERICA Inc. DocuWare AG Nemetschek Bausoftware GmbH 1 & 1 Internet AG NEMETSCHEK Slovensko s.r.o. Hybris AG SCIA International NV PSP AG Ernst Homolka Prof. Georg Nemetschek (Businessman) (Degree in engineering, self-employed businessman) since January 1, 2007 Deputy Chairman Spokesperson of the management board Finance and Administration since February 1, 2007 Rüdiger Herzog Member of the following supervisory boards: (lawyer, employed as general manager) Nemetschek Bausoftware GmbH Member SCIA International NV

Michael Westfahl (Degree in engineering) Sales and Marketing Member of the following supervisory boards: Nemetschek Bausoftware GmbH NEMETSCHEK Fides & Partner AG SCIA International NV

Dr. Peter Mossack (Degree in physics) Research and Development Member of the following supervisory boards: NEMETSCHEK Slovensko s.r.o.

Munich, March 6, 2007

Nemetschek Aktiengesellschaft

Ernst Homolka Dr. Peter Mossack Michael Westfahl Consolidated 90 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Analysis of the Fixed Assets of the Group as of December 31, 2006 and as of December 31, 2005

2006 Thousands of € Development of purchase cost / production cost

As of Reclassifi cations* Reclassifi cations** Translation Changes due to Additions Disposals As of Jan. 1, 2006 differences acquisitions Dec. 31, 2006

I. Intangible assets

Industrial and similar rights 8,605 0 0 –29 66,863 580 150 75,869

Self-generated software 0 0 0 0 0 142 0 142

Goodwill 23,734 0 0 –502 20,328 0 0 43,560

32,339 0 0 –531 87,191 722 150 119,571

II. Property, plant and equipment Land and buildings 0 0 0 0 0 0 0 0 Other equipment, furniture and fi xtures 14,529 0 0 –148 1,775 1,326 1.019 16,463

14,529 0 0 –148 1,775 1,326 1.019 16,463

III. Financial assets Associates / fi nancial assets 10,439 0 0 1 50 2 33 10,459

10,439 0 0 1 50 2 33 10,459

Total non-current assets of the group 57,307 0 0 - 678 89,016 2,050 1,202 146,493

* Reclassifi cation due to fi rst-time application of IFRS 3.79 ** Reclassifi cation pursuant to IFRS 5

2005 Thousands of € Development of purchase cost / production cost

As of Reclassifi cations* Reclassifi cations** Translation Changes due to Additions Disposals As of Jan. 1, 2005 differences acquisitions Dec. 31, 2005

I. Intangible assets Industrial and similar rights 10,199 0 1,781 –2 0 810 621 8,605

Self-generated software 3,788 0 0 0 0 0 3,788 0

Goodwill 71,911 – 48,638 180 641 0 0 0 23,734

85,898 – 48,638 1,961 639 0 810 4,409 32,339

II. Property, plant and equipment Land and buildings 1,122 0 1,122 0 0 0 0 0 Other equipment, furniture and fi xtures 14,119 0 310 195 0 1,326 801 14,529

15,241 0 1,432 195 0 1,326 801 14,529

III. Financial assets Associates / fi nancial assets 10,434 0 0 0 0 5 0 10,439

10,434 0 0 0 0 5 0 10,439

Total non-current assets of the group 111,573 - 48,638 3,393 834 0 2,141 5,210 57,307 91

Statement of Notes Audit Opinion Financial Statement of Changes in Group Equity Nemetschek Aktiengesellschaft

Development of accumulated depreciation / amortization Carrying amount

As of Jan. 1, Reclassifi cations* Reclassifi cations** Translation Amortization Equity method Disposals As of Dec. 31, As of Dec. 31, As of Dec. 31, 2006 differences and depreciation 2006 2006 2005

7,439 0 0 –8 1,635 0 98 8,968 66,901 1,166

0 0 0 0 0 0 0 0 142 0

0 0 0 0 0 0 0 0 43,560 23,734

7,439 0 0 –8 1,635 0 98 8,968 110,603 24,900

0 0 0 0 0 0 0 0 0 0

11,718 0 0 –99 1,247 0 911 11,955 4,508 2,811

10,052 0 0 0 0 70 7 9,975 484 387

29,209 0 0 –107 2,882 70 1,016 30,898 115,595 28,098

Development of accumulated depreciation / amortization Carrying amount

As of Reclassifi cations* Reclassifi cations** Translation Amortization Equity method Disposals As of Dec. 31, As of Dec. 31, As of Dec. 31, Jan. 1, 2005 differences and depreciation 2005 2005 2004

7,699 0 1,162 –10 1,518 0 606 7,439 1,166 2,500

3,546 0 0 0 242 0 3,788 0 0 242

48,638 – 48,638 0 0 0 0 0 0 23,734 23,273

59,883 – 48,638 1,162 –10 1,760 0 4,394 7,439 24,900 26,015

539 0 562 0 23 0 0 0 0 583

11,113 0 294 126 1,396 0 623 11,718 2,811 3,006

11,652 0 856 126 1,419 0 623 11,718 2,811 3,589

10,025 0 0 0 0 –27 0 10,052 387 409

81,560 – 48,638 2,018 116 3,179 –27 5,017 29,209 28,098 30,013 Consolidated 92 Financial Statements

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Audit Opinion

We have issued the following opinion on the consolidated fi nancial statements and the group management report:

“We have audited the consolidated fi nancial statements and the group management report prepared by Nemetschek Ak- tiengesellschaft, Munich, comprising the balance sheet, income statement, cash fl ow statement, statement of changes in group equity and notes to the consolidated fi nancial statements, for the fi scal year from January 1 to December 31, 2006. The preparation of the consolidated fi nancial statements and the group management report in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB [“Handels- gesetzbuch”: German Commercial Code] is the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated fi nancial statements and the group management report based on our audit.

We conducted our audit of the consolidated fi nancial statements in accordance with Sec. 317 HGB and German generally accepted standards for the audit of fi nancial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, fi nancial position and results of operations in the consolidated fi - nancial statements in accordance with the applicable fi nancial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated fi nancial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual fi nancial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and signifi cant estimates made by management, as well as evaluating the overall presentation of the consolidated fi nancial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the fi ndings of our audit, the consolidated fi nancial statements comply with IFRSs as adopted by the EU, the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB and give a true and fair view of the net assets, fi nancial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated fi nancial statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.”

Munich, March 9, 2007

Ernst & Young AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft

Marxer Haucke Wirtschaftsprüfer Wirtschaftsprüfer [German Public Auditor] [German Public Auditor] 93

Statement of Notes Audit Opinion Financial Statements of Changes in Group Equity Nemetschek Aktiengesellschaft

Financial Statements of Nemetschek Aktiengesellschaft

Balance Sheet 94 Income Statement 96 Financial Statements of 94 Nemetschek Aktiengesellschaft

Group Management Report Consolidated Consolidated Consolidated Balance Sheet Income Statement Cash Flow Statement

Balance Sheet of Nemetschek Aktiengesellschaft as of December 31, 2006 and as of December 31, 2005

Assets in € Dec. 31, 2006 Dec. 31, 2005

A. FIXED ASSETS I. Intangible Assets Franchises, industrial rights and similar rights and assets and licenses in such rights and assets 2,740.00 4,756.00

II. Property, plant and equipment 1. Leasehold improvements 622,955.00 814,145.00 2. Fixtures, fi ttings and equipment 63,837.00 68,953.00 686,792.00 883,098.00 III. Financial assets 1. Shares in affi liated companies 103,118,823.72 45,495,589.37 2. Loans due from affi liated companies 5,369,730.00 5,145,436.58 3. Investments 1,712,275.84 1,735,725.84 110,200,829.56 52,376,751.79

TOTAL FIXED ASSETS 110,890,361.56 53,264,605.79

B. CURRENT ASSETS I. Accounts receivable and other assets 1. Accounts receivable from trading 2,109.81 4,573.10 2. Accounts due from affi liated companies 5,830,793.92 6,151,312.89 3. Accounts due from other group companies 0.00 132,776.23 4. Other assets 2,031,068.72 2,815,924.21 7,863,972.45 9,104,586.43

II. Cash on hand and cash in banks 7,010,588.41 6,406,175.74

TOTAL CURRENT ASSETS 14,874,560.86 15,510,762.17

C. DEFERRED CHARGES AND PREPAID EXPENSES 51,655.70 29,718.60

125,816,578.12 68,805,086.56 95

Statement of Notes Audit Opinion Financial Statements of Changes in Group Equity Nemetschek Aktiengesellschaft

Liabilities and shareholders’ equity in € Dec. 31, 2006 Dec. 31, 2005

A. SHAREHOLDERS’ EQUITY I. Capital subscribed (Conditional capital EUR 850,000.00 [prior year: kEUR 850,000.00]) 9,625,000.00 9,625,000.00

II. Capital surplus 49,404,856.90 49,404,856.90

III. Balance sheet profi t 7,686,902.19 6,908,615.81

TOTAL SHAREHOLDERS’ EQUITY 66,716,759.09 65,938,472.71

B. PROVISIONS AND ACCRUED LIABILITIES 1. Accruals for pensions and similar obligations 142,800.00 202,700.00 2. Other provisions and accrued liabilities 3,436,282.05 1,310,418.87

TOTAL PROVISIONS AND ACCRUED LIABILITIES 3,579,082.05 1,513,118.87

C. LIABILITIES 1. Trade accounts payable 519,108.24 272,757.83 2. Accounts due to affi liated companies 510,594.96 0.00 3. Other liabilities – thereof for taxes: EUR 982,204.03 ( prior year: EUR 735,504.04) – thereof for social security: EUR 0.00 ( prior year: EUR 22,197.01) 54,491,033.78 1,080,737.15

TOTAL LIABILITIES 55,520,736.98 1,353,494.98

125,816,578.12 68,805,086.56 Financial Statements of 96 Nemetschek Aktiengesellschaft

Income Statement of Nemetschek Aktiengesellschaft for the period from January 1 to December 31, 2006 and 2005

in € Jan. 1 – Dec. 31, 2006 Jan. 1 – Dec. 31, 2005

1. Sales 1,678,345.38 2,161,211.50 2. Other operating income 5,134,018.74 5,154,686.48

Operating income 6,812,364.12 7,315,897.98

3. Personnel expenses a) Wages and salaries – 2,761,606.51 – 1,873,949.18 b) Social security, pension and other benefi t costs – thereof for pensions: EUR 5,236.96 (prior year: EUR 5,236.96) – 214,698.93 – 153,943.75 4. Depreciation and amortization a) of intangible assets and property, plant and equipment – 239,299.62 – 292,911.65 b) Write-down of current assets in excess of write-downs which are customary for the Company 0.00 – 299,427.66

5. Other operating expenses – 6,922,044.98 – 7,009,110.74

Operating expenses – 10,137,650.04 – 9,629,342.98 Operating results – 3,325,285.92 – 2,313,445.00 6. Income from investments – thereof from affi liated companies: EUR 6,675,907.62 (Vorjahr: EUR 6,558,214.03) 6,675,907.62 6,809,059.17

7. Income from profi t and loss absorption agreements 3,362,111.78 3,331,686.64 8. Income from marketable securities and loans including from write-ups – thereof from affi liated companies: EUR 276,388.38 (prior year: EUR 186,817.23) 276,388.38 360,206.62 9. Other interest and similar income – thereof from affi liated companies: EUR 0.00 (prior year: EUR 13,680.31) 202,933.60 416,795.32

10. Depreciation of fi nancial assets 0.00 – 805,345.56

11. Expenses from profi t and loss absorption agreements 0.00 – 1,053,089.64 12. Interest and similar expenses – thereof from affi liated companies: EUR 10,000.00 (prior year: EUR 0.00) – 10,672.13 – 416.19

13. Profi t from ordinary operations 7,181,383.33 6,745,451.36

14. Taxes on income – 290,431.62 – 249,501.92

15. Other taxes 143,584.67 0.00

16. Net income 7,034,536.38 6,495,949.44 17. Profi t carried forward from the previous fi scal year 652,365.81 361,019.52 18. Transfer to capital surplus 0.00 – 8,893.74 19. Transfer from reserve for treasury stocks 0.00 60,540.59

20. Accumulated profi t 7,686,902.19 6,908,615.81 Nemetschek in brief

Nemetschek Aktiengesellschaft Nemetschek AG Konrad-Zuse-Platz 1 81829 Munich Germany Phone: +49 (0) 89-9 27 93-1219 Fax: +49 (0) 89-9 27 93-5404 E-mail: [email protected] www.nemetschek.com